Will ETH drop to $2.1k after being rejected at $2.7k?

Ethereum has been rejected from the crucial 100-day MA of $2.7K, indicating a bull trap. This price action indicates sellers’ dominance, with the asset looking to continue its downward consolidation stage towards the $2.1k threshold.

Technical Analysis

By Shayan

The daily chart

Ethereum recently experienced a surge that breached the 100-day moving average at $2.7K and the neckline of an inverted head and shoulders pattern, prompting a brief liquidation event. This initial move was a bullish signal, which briefly sent the price higher. However, a rejection at the $2.7K level has led to a 12% decline, bringing the price back below the 100-day MA and the neckline.

This suggests that the breakout was false, forming a classic bull trap and highlighting the increasing dominance of the sellers. Ethereum is consolidating near the $2.5k support zone, but the price is expected to continue its decline, with the next important target being the $2.1k support level.

The 4 hour chart

In the 4-hour period, ETH’s brief push above the 0.618 Fibonacci level ($2.7K) was met with substantial selling pressure, most likely from smart money or institutional traders. These market participants exploited the liquidity above $2.7K, executing sell orders in a manipulative move that caused a sudden drop in price.

Since then, Ethereum has fallen to the lower limit of its rising flag pattern, currently around the $2.4K region. This level may provide short-term support and could trigger consolidation within the flag.

ETH could remain at this level in the short term, entering a consolidation phase before determining its next move. If buying pressure builds, a retest of the $2.7K resistance could occur. However, a breakdown of the $2.4K support would likely trigger more bearish momentum, with Ethereum heading towards the critical $2.1K support as the next main target.

Onchain analysis

By Shayan

The aforementioned significant rejection at the $2.7 thousand resistance zone represents an area characterized by a high concentration of short positions. Analysis of the futures market sheds light on the underlying dynamics, as the smart money likely exploited this pool of liquidity to trigger liquidations and execute their sell orders.

This strategic move by institutional traders caused the price of Ethereum to rise temporarily, only to face rejection and begin a downward correction.

Liquidity concentration is now moving below the $2.4k support level, indicating ETH’s next likely mid-term target. The presence of considerable liquidity below this zone makes it an attractive area for market participants, suggesting that Ethereum may continue its descent towards the $2.4k region and possibly beyond, as part of its corrective phase.

Given the technical setup and future market dynamics, Ethereum is expected to maintain downward pressure in the coming days, with a potential target below $2.4K.

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