- Ethereum is experiencing significant challenges following a bearish breakout below a crucial five-month rectangle pattern.
- Despite maintaining support at $2,611, short-term sentiment around ETH remains bearish.
- Positive U.S. Consumer Price Index (CPI) data released on August 14 triggered a “sell-the-news” reaction, causing a broad market downturn.
Ethereum faces mounting pressures after a recent bearish breakout, with key support levels in play and market sentiment turning negative.
Bearish Momentum Post 5-Month Rectangle Pattern Breakout
Ethereum’s price has been largely range-bound over the past five months before experiencing a bearish breakout that set a resistance level at $2,933. On August 14, ETH attempted to surpass this resistance but failed, highlighting weakening momentum as indicated by a rising wedge pattern on the intraday chart. Renowned analyst Peter Brandt suggests that this bearish momentum may continue, targeting a potential drop to $1,652. Brandt’s bearish outlook would be invalidated only if ETH climbs above the $2,961 mark.
Increased Selling Pressure and Market Indicators
Technical indicators are supporting this bearish outlook. The Chaikin Money Flow (CMF) stands at -0.09, indicating selling pressure and a general lack of confidence among market participants. Additionally, the Bollinger Bands are widening, pointing to increased volatility amid the downtrend. The price fluctuation from the upper band to the lower band within a single day underscores a sharp bearish reversal. Should ETH fail to maintain support at $2,611, it could drop further to the 1.618 Fibonacci level at $2,521. Crucially, price levels between $2,614 and $2,800 are deemed critical since many investors bought at these levels and may opt to sell to minimize losses if these supports are breached.
Futures Market Sentiment and Open Interest Trends
Examining the Futures market reveals a notable shift in sentiment. The Long/Short Ratio at 0.90 suggests a preference for short positions over long ones, indicating that traders are increasingly betting against ETH. Furthermore, data from Coinglass highlights a 3% drop in Open Interest (OI), falling steadily from over $14 billion at the beginning of the month to approximately $10 billion currently. This declining Open Interest further exemplifies traders’ diminishing confidence in ETH’s price stability.
Conclusion
In summary, Ethereum is currently grappling with pronounced bearish sentiment and critical support levels that may determine its short-term trajectory. Technical indicators and Futures market trends depict a cautious outlook, with significant resistance observed at higher price levels. Investors are advised to pay close attention to these support and resistance levels, and the broader market sentiment, as they navigate the evolving landscape. As always, maintaining a diversified portfolio and employing risk management strategies are essential in these volatile times.
