Key Points
- Ethereum’s bearish market structure and magnetic zone below $2.9k indicate potential further losses.
- Despite a drop in network activity, smart money activity signals a bullish trend.
Ethereum [ETH] has been trading at the key support level of $2.9k, a level it previously visited on July 5th. In the weeks that followed, the price was driven up to $3.5k by bullish activity, but then faltered.
Market Indicators and Volatility
The question now is whether we can anticipate a bounce back to the $3.5k mark. Although network activity has been declining in recent months, smart money activity has been emitting bullish signals. However, technical indicators continue to predict a bearish trend.
As of the time of reporting, Ethereum was trading at $2916, exhibiting a bearish market structure on the daily timeframe. If the price dips below the $2.9k level, the next significant support zone lies at $2.6k. Current price action suggests that such a dip is feasible.
The daily RSI is just above oversold conditions and the OBV has been on a steady decline since June. These factors together suggest that further losses are likely. The $2.9k support is also the 61.8% Fibonacci retracement level, which has been defended since April, indicating that there is a fair chance that it will be defended again.
Liquidation Levels and Possible Reversal
In the past six weeks, the cluster of liquidation levels at the $2.8k zone has grown. Prices are often drawn to these liquidity pools, making them magnetic zones. Although $2.9k is a strong support, it is highly probable that the $2740-$2800 region will be reached.
A bullish reversal from this point is anticipated, but traders should be prepared for volatility in the lower timeframe. A couple of days of trading to establish $2.7k-$2.8k as a support, combined with a surge in demand, could motivate swing traders to go long.
Please note that the information provided does not constitute financial, investment, trading, or any other type of advice and should be considered solely as the writer’s opinion.
