Ethereum Price Analysis: ETH Could Plummet to $3K After Losing These Support Levels

Ethereum’s price has failed to break above the key $4,000 level and has been experiencing bearish price action since then.

Investors are now worried that ETH might be reversing its overall price trajectory.

Technical Analysis

By Edris Derakhshi (TradingRage)

The Daily Chart

The daily chart shows that Ethereum’s price has formed a clear double-top pattern at the $4,000 resistance level while getting rejected twice. The $3,500 level has also been broken to the downside, and the market has failed to reclaim it following multiple unsuccessful attempts.

At the current stage, a drop lower toward the $3,000 support zone and the 200-day moving average, located around the same level, looks probable. Price’s reaction to this key level could determine the mid-term fate of the market.

The 4-Hour Chart

Looking at the 4-hour timeframe, a drop toward the $3,000 level seems less probable, as the market is seemingly climbing toward the $3,500 level to test it again.

With the RSI also on the verge of rising above the %50 threshold, the market is demonstrating bullish momentum in this timeframe. This can indicate that a breakout above the $3,500 level is more probable this time. This scenario is of course, valid if the price is able to reach the level soon.

On-Chain Analysis

By Edris Derakhshi (TradingRage)

Ethereum Exchange Reserve

While Ethereum’s price has been dropping after getting rejected by the $4,000 resistance level, looking at on-chain network activity provides an interesting clue to investors’ behaviour.

This chart presents the Ethereum exchange reserve metric, which measures the amount of ETH that is held in trading platforms. This value is also used as a proxy for supply, as the coins held in exchanges can be sold almost any time.

As the chart presents, the exchange reserve metric has been gradually rising over the past few months, indicating that the investors are selling their coins, likely for a profit, as the price reaches the $4,000 level. This has been one of the key contributing factors to the current halt in Ethereum’s bullish run.

Meanwhile, during the recent price correction, the exchange reserve metric has been dropping and is currently declining below its 100-day moving average. This can indicate a potential accumulation by market participants, that could soon lead to a rally higher for ETH.