- Ethereum showed a classic descending channel pattern on the daily chart, confirming a bearish trend.
- The immediate support area at $3,200 can dictate ETH’s short-term trend.
Ethereum’s (ETH) price decline from the $3,900 resistance level last month has set the stage for the bears.
The altcoin’s increasing open interest trend during this time has raised further questions about its ability to hold the immediate support level.
If sellers continue to increase pressure from press time levels, ETH could nullify any upside and see a downside breakout. A recovery from $3,260 can help buyers regain some momentum.
At the time of writing, ETH was trading at $3,362, up nearly 3% in the last 24 hours.
Can ETH bulls reverse the bearish trend?
Source: Hyblockcapital, ETH/USD
ETH sellers have consistently held the resistance level in the altcoin near the $4,000 mark for over three months. The $3,900 ceiling stalled ETH’s 35 percent gain over the past month and pushed the price below the 20-day and 50-day EMAs.
The resulting price movement created a classic descending channel pattern on ETH’s daily chart.
If the upper trendline of this descending channel continues to resist bull runs, ETH could extend its downtrend in the short term. In this case, the $2,800 region could help trigger a bullish recovery.
On the other hand, a possible close above the current pattern may pave the way for bulls to initiate a rally. In such a case, the first significant resistance level for buyers would be in the $3,900 area.
The Stochastic RSI was showing extremely oversold readings at the time of writing. Buyers should wait for a possible bullish crossover to assess ETH’s short-term bullish potential.
A price move above the 20/50 EMA and a bullish crossover on the stochastic RSI could together provide a strong buy signal for traders.
Ethereum: Bearish edge is emerging
Source: Hyblockcapital, ETH/USD
According to data from Hyperblockcapital, ETH’s open interest indicator has been trending up (higher highs) over the past month.
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However, price action has been making lower highs during this time. This reading typically indicates a bearish divergence – where more traders are taking short positions than long ones.
Additionally, total net exchange flows increased by almost 140% over the past day, confirming the overall bearish sentiment. ETH’s recovery from the $3.2k-$3.3k support area would be crucial to break the bearish sentiment.
