Amid a broader market pullback, Ethereum is testing a crucial support level. Will the price of ETH hold steady for a potential bounce?
With the broader market remaining bearish and Bitcoin dipping to $101,000 levels, Ethereum has dropped 3.75% over the past 24 hours. Breaking below the $3,200 support level, Ethereum’s market cap has fallen to $385.15 billion.
Accordingly, Ethereum’s seven-day return has now dropped to negative 5.12%, with its price trend suggesting a pullback to the $3,100 support level. Could this lead to an extended correction?
Ethereum Price Analysis
On the daily chart, Ethereum’s price trend continues to show a pattern of lower highs. The recovery from $3,137 failed to sustain momentum, with two consecutive bullish candles unable to push above the 50 EMA at $3,369.
Ethereum is showing signs of a bearish reversal. It has experienced an intraday pullback of 1.43%, marking its second consecutive bearish candle. This puts added pressure on the current crucial support at $3,137.
Supporting the price action, the 200-day EMA line serves as a dynamic cushion. Additionally, lower price rejections have led to a bullish divergence in the RSI, increasing the likelihood of a bullish comeback.
However, broader market volatility, with Bitcoin potentially retracing to the $100,000 level, could lead to a bearish breakdown.
Bearish Speculations Surge Amid Declining Market
Amid the uncertain price action, the Ethereum derivatives market reveals a rise in bearish speculations. The Ethereum open interest is down by 1.71% to $30.64 billion.
Ethereum Derivatives
Furthermore, the long-to-short ratio over the past 24 hours has dropped to 0.9139, indicating a growing number of bearish positions.
Meanwhile, the funding rate remains neutral at 0.090% compared to previous days. Bullish traders are continuing to pay the same premium to hold their positions.
Ethereum ETFs Record Net Outflow
As bearish speculations rise, the U.S. Ethereum spot ETFs have seen a net daily outflow. On January 22, the daily net outflow stood at $8.46 million, leading the bearish trend.
While most Ethereum ETFs remained neutral, Fidelity saw an inflow of $8.98 million. However, Grayscale’s Mini Ethereum Trust saw a larger outflow of $17.44 million, turning the daily flow negative.
ETH Price Target
Despite the negative technical signals, Ethereum’s underlying support at $3,137 hints at the possibility of a bounce. Ethereum could test the 23.6% Fibonacci level at $3,557 if a new swing high is achieved.
On a positive note, a rounding reversal pattern could lead the price to test the $4,000 psychological level. On the other hand, a breakdown below $3,137 could bring the $3,000 psychological level into focus. Beyond that, the next crucial support lies at $2,780.
