As a seasoned crypto investor with over a decade of experience under my belt, I can confidently say that we are standing at a pivotal moment for Ethereum (ETH). The technical and on-chain analysis I’ve conducted paints a clear picture of the potential outcomes in the coming days.

Ethereum is now at a critical juncture, resting on its head and shoulders neckline and the pivotal 100-day moving average. If it breaks out from here, we could witness a substantial upward spike, possibly triggered by a chain reaction of short positions being closed rapidly.

In the upcoming period, the way Ethereum’s price behaves will be significantly influential in shaping its long-term outlook.

Technical Analysis

By Shayan

The Daily Chart

Currently, Ethereum is at a pivotal moment, standing at a significant resistance area that encompasses the Head and Shoulders neckline and the 100-day moving average priced around $2,700. Lately, the market has displayed quiet, horizontal movement, suggesting a balance between buyers and sellers. This equilibrial state indicates that neither party is able to exert dominance over the other at this time, revealing uncertainty in the market.

As a researcher examining the Ethereum market, if we observe a break above the crucial resistance zone, it suggests that the Head and Shoulders (H&S) pattern has completed, indicating a potential medium-term upward trend. A successful breach would not only validate this pattern but also allow Ethereum to reclaim its 100-day Moving Average, strengthening the bullish sentiment. Under such circumstances, Ethereum’s price might aim for the $3K resistance level, another significant barrier to overcome.

In other words, there’s currently an oversupply in this region, and if Ethereum can’t break through, it may face rejection and possible stagnation. Consequently, the future price movements will play a significant role in shaping Ethereum’s long-term outlook.

The 4-Hour Chart

On the 4-hour chart, Ethereum shows signs of holding steady in an area close to the resistance region defined by the 0.5 ($2.6K) and 0.618 ($2.7K) Fibonacci retracement levels. This region has proven tough for buyers, as multiple past attempts to breach it have been thwarted by strong selling activity.

Additionally, there’s a hint of a minor bearish divergence appearing between the price action and the RSI, implying that selling pressure might be subtly growing. This could potentially lead to a forthcoming rejection at the resistance area, setting off a downward trend towards the $2.3K support region.

Conversely, a sudden breakout above $2.7K would open the path for further gains, potentially leading to a rally toward the $3K threshold. As a result, the upcoming price movement will provide important insights into Ethereum’s next trend.

Onchain Analysis

By Shayan

As Ethereum nears a significant resistance level at roughly $2,700, examining the futures market offers valuable clues about where its price might head in the near future. The Binance Liquidation Heatmap draws attention to crucial liquidity zones filled with numerous stop-loss orders and the liquidation points of futures contracts.

The graph shows a significant accumulation of liquidity near the $2.7K resistance level, suggesting a high number of short positions in that area. This is relevant because when prices reach these levels, liquidations intensify market movements, causing a chain reaction of liquidations known as a cascade. If there’s a breakout above $2.7K, it could lead to the forced closure of many short positions, increasing buying pressure and possibly driving the price further upwards.

However, there is also the potential for a false breakout, leading to a bull trap. In such scenarios, larger market participants or whales may exploit the high liquidity by executing large trades that briefly drive the price above $2.7K, only to reverse the trend quickly. This rapid price reversal could catch overleveraged traders off guard, pushing Ethereum’s price back below $2.7K and trapping buyers who anticipated a sustained breakout.

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2024-10-20 09:28