Ethereum Price Analysis: Is ETH Ready for a Healthy Correction?

Ethereum is struggling to surpass the 200-day moving average at $2.7k, forming a double-top pattern indicative of a bearish trend. Analysts suggest a potential correction towards $2.2k, serving as a healthy reset for the price. On lower timeframes, an ascending wedge indicates diminishing bullish momentum, and recent on-chain metrics show an uptick in aggressive selling, adding to uncertainty around the asset’s upcoming movements.

Ethereum is facing a tough battle to reclaim its pivotal 200-day moving average, which sits at around $2.7k. Currently, it looks like the cryptocurrency is forming a double-top pattern, often seen as a bearish indicator. Recent trading suggests the price may be consolidating and could even dip towards the $2.2k mark before making another breakout attempt.

Taking a closer look at the daily chart, we see that ETH has been stopped dead in its tracks by strong resistance at that $2.7k threshold. Seller activity here is quite stark, showing a true struggle for upward movement. The formation of the double-top is particularly significant. This indicates profit-taking is happening, suggesting Ethereum might be on the brink of a short-term correction targeting the $2.2k zone. That said, this retracement could actually set the stage for a healthy reset, one that could attract fresh demand.

On the 4-hour chart, a worrying trend is appearing in the shape of an ascending wedge. This pattern is generally a bearish signal, hinting that buyer strength is waning and sellers are taking over. Plus, a bearish divergence between the price and the RSI indicator confirms these suspicions of weakening bullish momentum. If ETH breaks below the wedge’s lower boundary, which hovers near $2.4k, we could very well see a move down to that $2.2k support level. But, a surprise breakout from this wedge could send the price skyrocketing, potentially triggering a short squeeze.

When it comes to on-chain analysis, Ethereum’s current hovering below a significant resistance range, which makes investors nervous about the potential for a bullish breakout. While the price has been sending mixed signals, insights from the futures market provide a glimpse into changing sentiments that might dictate Ethereum’s next big move.

A key indicator to watch is the ETH Taker Buy-Sell Ratio, which shows whether there is more aggressive buying or selling happening in the market. This ratio’s 14-day moving average has recently fallen, suggesting that aggressive selling is ramping up, with bears seemingly taking control. This has resulted in profit-taking and distribution, which isn’t ideal for the price stagnating at resistance levels.

If this selling pressure continues and the ratio keeps heading downwards, we could see Ethereum heading for a deeper correction with the $2.2k support zone looking like a likely target. On the flip side, if this aggressive selling is mainly coming from short-term investors or those with weaker hands, it might just signify a temporary consolidation before the bullish trend re-emerges.

In summary, Ethereum’s next steps will basically depend on whether the current selling momentum continues to build or starts to fizzle out against rising mid-term demand.

Also, don’t miss the Binance offer where new users can get a free $600 by signing up through CryptoPotato. And for those looking at Bybit, there’s word of a limited offer for a free $500 position on any coin – worthwhile if you’re interested!

Disclaimer: The views expressed by authors at CryptoPotato are just those of the quoted writers and do not represent the opinions of the platform regarding buying, selling, or holding any assets. Always do your own research before investing, and take the details at your own risk.