Is ETH About To Sink To $3000 After Recent Rejection?

Ethereum’s attempt to break through the crucial $4,000 mark failed, prompting a sharp pushback and raising concerns about the dominance of sellers in the market.

Fear is rising, with expectations of a possible sell-off in the coming days if key support levels fail to hold.

Technical Analysis

By Shayan

The daily chart

Ethereum recently experienced a spike, targeting the crucial $4,000 resistance. However, substantial selling pressure in the fair value gap between $3.7K and $3.8K led to a firm rejection.

It has let ETH get closer to its previous swing low of $3.3k. A daily close of the candle below this level could indicate further bearish momentum. However, in the bigger picture, the $3,000 support region remains the critical defensive zone for buyers as it aligns with the critical 100-day MA. Ethereum may experience a significant decline in the medium term if the price breaks below this region.

The 4 hour chart

In the lower timeframe, Ethereum price action formed a three-unit pattern in the $4K region, accompanied by a bearish divergence on the RSI indicator. This bearish reversal pattern highlights a loss of buying momentum.

The asset has since breached the crucial $3.5K support region, triggering a pullback and subsequent cascade. Ethereum is currently approaching a key support region at its major low of $3,000, aligning with the 0.5-0.618 Fibonacci retracement levels.

Failure to hold this support could lead to further declines, with potential targets at lower price levels in the medium term.

Onchain analysis

By Shayan

The sustainability of any increase in market price often depends on rising funding rates, which reflect robust demand in the derivatives market. Without this increase, uptrends can fail. It is important to note that this increase does not need to happen immediately, but its absence during a rally raises concerns about the strength of the market.

During Ethereum’s recent rally, funding rates spiked midway through the uptrend, suggesting a delayed influx of demand. However, after ETH faced rejection from the $4,000 resistance, funding rates decreased significantly.

This decrease highlights a reduced commitment of operators in the derivatives market and insufficient demand to maintain the upward trend. If Ethereum fails to hold above the $3,000 support, the market could face more selling pressure and deeper corrections. Therefore, the $3,000 support level remains crucial for ETH’s next move.

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