ETH Declines 5% in One Day; Will $1.8K Remain Support or Is a Further Drop Expected? (Ethereum Price Review)

Following a period of consolidation and correction, Ethereum’s price has recently reached the vital support level of the 50-day moving average. Currently, it is navigating a narrow price range between the 50-day MA and the key resistance level of $2K.

Technical Analysis

By Shayan

The Daily Chart

Upon examining the daily chart, it is evident that the price previously established a higher-high pattern before undergoing a notable decline. The 50-day moving average served as a support level at $1.8K, resulting in considerable volatility in shorter timeframes and a prominent shadow on the daily chart.

At this moment, ETH is trapped within a tight dynamic range between the 50-day moving average, currently positioned at $1847, and the significant resistance area of $2K.

If the price succeeds in breaking through the $2K resistance and its previous swing at $2.1K, it could potentially initiate an extended upward movement. On the other hand, if it drops below the 50-day MA, the 100-day moving average at $1.7K will become the main support level.

Source: TradingView

The 4-Hour Chart

In the analysis of the 4-hour chart, the price faced rejection at the upper boundary of the ascending channel, resulting in a downward movement toward the channel’s mid-trendline. Despite experiencing significant volatility after reaching the trendline, the buying pressure in this crucial area remains apparent.

If the price falls beneath this vital level, the next target for Ethereum would be $1.7K. However, if ETH manages to find support in this area, the bulls may attempt another push toward the $2.1K level.

Source: TradingView

On-chain Analysis

By: Edris

ETH’s price has recently declined after an upward trend over the past months. Analyzing the futures market sentiment indicators, it appears that the long liquidation cascade is to blame.

This chart illustrates Ethereum’s Open Interest, which quantifies the number of open futures contracts. Open interest typically rises when market sentiment is optimistic, and higher values can lead to increased volatility in the short term.

Considering the recent price movements and the Open Interest chart, it is clear that this metric increased towards the end of the recent rally but has also seen a significant drop as the price has fallen. This abrupt price decrease is likely a result of long positions being liquidated, contributing to the selling pressure and exacerbating the decline.

This phenomenon is referred to as a liquidation cascade and generally occurs when open interest surges rapidly. However, this metric is now reflecting lower values due to the extensive liquidations, and reduced volatility may be anticipated in the near term.

Source_CryptoQuant

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Cryptocurrency charts by TradingView.