Critical technical warning flashes for ETH as $2.1k looks imminent

Ethereum has been notably bearish, marked by a sharp decline following a pullback to the lower boundary of a broken wedge, along with the formation of a death cross.

Despite this, the price is approaching a crucial support level that could lead to a short-term sideways consolidation.

By Shayan

The daily chart

Ethereum has been in a strong downward trend, causing fear and uncertainty among market participants. Low inflows into spot ETH ETFs have further underscored this sentiment, indicating waning investor interest and the appearance of the death cross, where the 100-day moving average crosses below the 200-day moving average .

After a rejection of the lower boundary of the multi-month wedge and Fibonacci levels 0.5-0.618, Ethereum has continued its decline, confirming the strength of the sellers in the market.

However, the price is approaching a critical support zone, defined by the static level of $2.1 thousand and the Fibonacci retracement level of $0.786 to $2067. This area is expected to see substantial demand, which could lead to a short-term pause in the downtrend, with potential sideways consolidation before Ethereum’s next move is determined.

Source: TradingView The 4-hour chart

On the 4-hour chart, ETH was firmly rejected from the resistance zone between the 0.5 ($2.6K) and 0.618 ($2.7K) Fibonacci levels, leading to continued bearish momentum towards the support of 2.1 thousand dollars. This level has held previously, particularly in early August, suggesting it could attract buyers looking to accumulate at these prices.

If demand resurfaces at the $2.1K mark, Ethereum may experience a temporary consolidation phase, stopping the downward pressure. However, a breach of this crucial support could trigger a long liquidation event, which could drive the price towards the $1.8k region.

The next few days will be crucial to determine if Ethereum can hold this support or if a deeper correction is on the horizon.

Source: TradingView

By Shayan

Ethereum’s value is fundamentally tied to its decentralized network and the active engagement of its users. A key metric for evaluating this commitment is the number of unique active addresses on the network, which can serve as a valuable indicator for demand and the overall valuation of the Ethereum market.

The graph shows the 14-day moving average of Ethereum active addresses, which represents the total number of different active addresses, including senders and receivers of ETH transactions. Since the end of March 2024, this metric has declined rapidly, reflecting a drop in user activity and transaction volumes.

This downward trend reflects bearish market sentiment, with reduced demand and less investor participation. For Ethereum to recover and potentially embark on a sustainable long-term rally, this trend must reverse. A resurgence in the number of active addresses would indicate growing interest and accumulation of Ethereum, indicating more robust demand and the possibility of a bullish market reversal.

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