Is ETH on the Verge of a Deeper Correction Toward $2.7K?

Ethereum’s price has been dropping recently, following a second rejection from the $4,000 resistance level, and it has yet to recover.

Technical Analysis

By TradingRage

The Daily Chart

On the daily chart, the price has been making lower highs and lows since failing to break the $4,000 level to the upside a while ago. The market has also broken below the 200-day moving average, around the $3,100 mark.

The price is currently retesting the 200-day moving average but is seemingly getting rejected to the downside. As things currently stand, the cryptocurrency seems likely to drop toward the $2,700 support level in the short term.

The 4-Hour Chart

The 4-hour chart demonstrates a zoomed-in view of the recent price action. As evident, the downtrend has recently been aggravated to the downside, with the market briefly breaking below the $3,000 support level.

Yet, following an oversold signal by the RSI, the price has recovered above the mentioned support zone. However, the price seemingly lacks the momentum to continue higher and might be on the verge of a deeper decline toward the $2,700 area.

On-Chain Analysis

By TradingRage

Ethereum Exchange Reserve

During the Ethereum downtrend in the last few weeks, many analysts have been looking for signs of capitulation that point to a potential bottom. Some signals are becoming evident.

This chart displays the Ethereum Exchange Reserve metric, which measures the amount of ETH held in exchange wallets. An increase shows potential selling pressure, while a decline indicates a decrease in supply.

Following the recent brief decline below the $3,000 level, the exchange reserve metric has experienced an increase above its 30-day moving average. This might indicate the beginning of the capitulation phase, as many investors’ stop losses were below the $3,000 level.