After the bears took control last night, Ethereum shows signs of a potential reversal from key support levels. Could this reversal drive ETH price towards a channel breakout rally?
Volatility in the altcoin market surged overnight, with the total crypto market cap, excluding Bitcoin, falling 5.10% to $1.44 trillion. Amid increased volatility, Ethereum saw a significant pullback of 2.85%.
This indicates a higher price rejection from the 24-hour high of $3,445, forming a bearish candle. Could this short-term correction lead to a decline to $3,000 for Ethereum?
ETH Price Analysis
Ethereum is currently forming a falling channel pattern on the daily chart. However, strong support at the 50% Fibonacci level of $3,158 has helped Ethereum bounce back.
With lower price rejection in the two intraday candles, Ethereum has regained its footing, now trading at $3,290—an intraday gain of 2.51% from the opening price of $3,211.
Additionally, the current reversal from the overhead trendline suggests a potential continuation of the downtrend toward the local support trendline. However, the lower price rejections hint at a possible double-bottom reversal near the 50% Fibonacci level.
The daily RSI shows a strong bullish divergence, supporting the potential for a double-bottom reversal. However, the recent surge in selling pressure has led to a bearish crossover between the 20-day and 50-day EMA lines.
Ethereum Open Interest Hits $31.45 Billion
As volatility persists, the derivatives market is signaling that Ethereum is at a crossroads. Ethereum’s open interest has increased by 0.55%, crossing above the $31 billion mark, currently standing at $31.45 billion.
However, the long-to-short ratios remain significantly bearish at 0.9554. Nevertheless, the funding rate of Ethereum has increased to 0.0108%. This reveals the bullish confidence of traders to hold onto their long positions despite the recent volatility
Ethereum Price Targets
With the intraday recovery of 2.51% following the two consecutive bearish candles, Ethereum is revealing strong bullish support at critical levels. Hence, Ethereum could see a falling-channel breakout rally if the bullish recovery gradually gains momentum as the broader market stabilizes.
Based on Fibonacci levels, this breakout rally would likely challenge upcoming critical resistance at the 78.60% and 100% Fibonacci levels, priced at $3,692 and $4,091, respectively.
This suggests an upside potential of 25% for Ethereum in January. On the other hand, a close below the 50% Fibonacci level and the 200-day EMA line could lead to a retest of the 38.20% Fibonacci level at $2,937, putting the psychological $3,000 mark at risk.
DisClamier: This content is informational and should not be considered financial advice. The views expressed in this article may include the author's personal opinions and do not reflect The Crypto Basic opinion. Readers are encouraged to do thorough research before making any investment decisions. The Crypto Basic is not responsible for any financial losses.
