The death cross formation indicates potential ETH falls to $2.1K

Last week, Ethereum showed a significant bearish signal as the price completed a pullback towards the lower limit of a multi-month wedge. The 100-day moving average also crossed below the 200-day moving average, forming the well-known “Death Cross”.

This development has raised expectations of a continuation of the bearish trend towards the $2.1 thousand threshold.

Technical Analysis

By Shayan

The daily chart

Ethereum has shown a sharp downward trend in recent weeks, causing fear and uncertainty among market participants. The price has completed a retracement towards the lower limit of a multi-month wedge, initiating a significant decline.

This bearish momentum is further strengthened by the formation of the “Death Cross”, where the 100-day moving average has crossed below the 200-day moving average, a classic bearish indicator. This development has resulted in bearish market sentiment, leading to panic selling and increasing the likelihood of a continued downtrend towards the $2.1K support level in the near term.

The 4 hour chart

On the 4-hour chart, ETH found a firm rejection of the critical resistance zone between the Fibonacci levels of 0.5 ($2.6K) and 0.618 ($2.7K). This led to a sharp decline that broke the lower boundary of a corrective ascending wedge. This breakdown indicates a dominant downtrend, with sellers pushing prices lower. Recently, the asset attempted a retracement towards the broken wedge, suggesting the possibility of a continuation to the downside.

Ethereum’s next significant support is around the $2.1K level, where demand could resurface to temporarily halt the downward pressure. However, until this level is tested, the prevailing bearish trend is expected to persist, with the $2.1k threshold as the main short-term target.

Onchain analysis

By Shayan

As the price of ETH has recently experienced a notable downward trend, traders are questioning whether the market is in a build-up or distribution phase. The Ethereum Exchange Reserve metric, which tracks the amount of ETH held in exchange wallets, provides valuable insight into this question. Coins held on trading platforms are often considered an intermediary of supply as they can be sold quickly.

Between June and August, the metric trended upward, indicating a distribution phase contributing to the ongoing downtrend. After the recent death cross, the exchange reserve metric is rising sharply again. This suggests that another phase of distribution may develop.

As Ethereum reserves on exchanges continue to grow, so does the likelihood of a decrease in demand and, consequently, a further drop in price. However, it is also important to consider the state of the futures market as it plays a crucial role in determining price action and should be carefully analyzed before any definitive conclusions are drawn.

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