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Ethereum’s recent price movements show a significant correction, bringing the cryptocurrency to a critical support level as market dynamics evolve.
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Despite a 20% drop, Ethereum’s technical patterns indicate a potential bullish reversal, particularly around the key $3,000 level.
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“The recent dip has brought ETH close to the lower boundary of an ascending flag, which typically precedes a breakout,” said a COINOTAG analyst.
Ethereum faces pivotal price levels, as a 20% correction highlights a potential for recovery amid key technical indicators.
ETH approaching key support at $2.8k
Analyzing the weekly chart, Ethereum’s price has entered a consolidation phase within a bullish flag pattern. This setup often heralds potential breakouts when the price approaches the lower boundary of the formation, currently around $2,800.
If this support level holds, it could serve as a catalyst for a substantial price increase, with price targets potentially reaching as high as $6,000. Conversely, if ETH fails to maintain this crucial support, we may witness additional downward pressure in the market.
Source: TradingView
Signs of a short-term reversal at $3,000
Examining the daily chart, Ethereum appears poised for a short-term bullish reversal. The $3,000 psychological threshold has become central to trading strategies as ETH has experienced a slight uptick in trading volume.
Source: TradingView
Data from CryptoQuant reinforces this analysis, indicating a notable rise in active addresses on the Ethereum network. Such a surge in network participation typically points toward renewed investor interest, which could lead to either price stabilization or a bullish breakout.
Source: CryptoQuant
Rising exchange outflows indicate profit-taking
While the short-term outlook appears optimistic, on-chain metrics present a different narrative for long-term holders. Recent data from CryptoQuant shows increasing ETH exchange outflows, suggesting that sellers are locking in profits around the pivotal $3,000 mark.
This pattern of outflow spikes followed by price corrections is a historic trend in cryptocurrency markets, indicating a potential build-up of sell-side pressure.
Source: CryptoQuant
ETH holders remain profitable despite short-term corrections
In the face of recent corrections, a significant majority of ETH holders remain profitable. According to data from IntoTheBlock, approximately 76% of addresses holding ETH are currently in profit, reflecting the underlying confidence among long-term investors and establishing a strong base for potential future rallies.
Source: IntoTheBlock
Recent analysis indicates that the short- and long-term price trajectory of Ethereum is hinged on a few critical price levels. The $2.8K flag support level is vital for potential upward movement, while increased trading activity around the psychological $3K level enhances the bullish outlook. Long-term confidence remains strong, bolstered by the fact that most holders remain in profit.
Conclusion
As Ethereum navigates through this period of volatility, its future direction will likely depend on how it responds to these key support levels. Maintaining the $2.8K support may initiate a significant upward trend, indicating a strong recovery potential for ETH, especially as most holders continue to be in profit.
