Ethereum Increase Toward $4K: A Mid-Term Bullish Reversal?

Key Takeaways:

• Crucial Support Zone: Ethereum’s price has hit a key support area defined by the 100-day moving average and the 0.5-0.618 Fibonacci levels.

• Potential Bullish Rebound: Strong demand at this level suggests a likely mid-term bullish reversal.

Daily Chart Analysis

A close look at Ethereum’s daily chart reveals that the cryptocurrency has entered a significant support zone after a bearish correction. This zone spans from the 0.5 ($3421) to 0.618 ($3289) Fibonacci levels, coinciding with the 100-day moving average at $3387. This convergence of support indicators points to a high potential demand area where market participants might open long positions.

Considering these factors, we can expect an increase in demand, potentially leading to a mid-term bullish reversal targeting the $4K resistance level. However, if the price drops below this support zone, the next key defense line for buyers is the 200-day moving average.

4-Hour Chart Analysis

On the 4-hour chart, Ethereum’s recent correction has formed a bullish continuation flag pattern. The price is currently near the lower boundary of this flag, aligning with the critical support around $3.3K.

If buyers re-enter the market and increase demand, the price could break above the flag’s upper boundary at $3.6K, initiating a strong uptrend towards the $4K resistance. Conversely, if sellers push the price below the $3.3K support, a drop towards the substantial $2.9K support is likely. In the mid-term, the price is expected to remain within the $3.3K-$3.6K range until a breakout occurs.

Market Sentiment and Funding Rates

Analyzing the future market sentiment is crucial for forecasting Ethereum’s next moves. The Ethereum funding rate metric, which indicates whether buyers or sellers are executing orders more aggressively, has shown a notable increase after a period of slight declines. Positive funding rates suggest bullish sentiment, while negative rates imply bearish sentiment.

The recent uptick in the funding rate metric coincides with the corrective phase in Ethereum’s price, suggesting that demand is present near the critical support level of $3.3K. This demand could halt further downward pressure and initiate a bullish reversal. If the funding rate metric continues its upward trend, it indicates that the futures market sentiment is turning bullish, making a mid-term bullish reversal more likely.

Conclusion

Ethereum is currently in a critical support region with significant potential demand. If the market sentiment continues to improve and demand increases, we can expect a mid-term bullish reversal, targeting the $4K resistance level. However, traders should watch for any potential breakdowns below the $3.3K support, which could lead to a drop towards the $2.9K level. The coming days will be crucial in determining Ethereum’s next price direction.