The recent rejection of Ethereum price and its drop below the $4,000 level has created a worrying trend that could cause the price to skyrocket. The main focus is on the 0.618 Fibonacci retracement level where the last rejection occurred. Considering this, Ethereum price is likely to see further declines in the coming days, although there is still a chance that the bulls can take over and invalidate the entire bearish setup.
Ethereum price is showing major weakness
Rejection from 0.618 Fibonacci Retracement Level marked The beginning of the decline from the $4,200 level during the previous recovery. This rejection led to the formation of lower highs on the 4-hour time frame, but historically, the formation of such lower highs means more selling pressure on the digital asset.
Ethereum price is in a precarious position as the bullish momentum appears to be weakening. Cryptocurrency analyst The Alchemist Trader explained that this rejection occurred in conjunction with an increase in bearish trading volumes as investors dumped their holdings into the market and bears once again took control.
Following this development, Ethereum price continues to struggle around $3,900, and where is the next local support? While the cryptocurrency is maintaining tentative hold at best on this local support, it suggests that the bulls may actually be losing ground at this level.
If this correction phase continues, it means that the Ethereum price decline is far from over. The current localized weakness is straining support, and if $3,900 fails outright, the next major support lies below $3,400, more specifically at $3,385. This will be the next base for the bulls to take action.
“From a structural perspective, Ethereum’s inability to maintain momentum indicates increasing bearish pressure on a shorter time frame,” the crypto analyst explained.
For ETH Bull
Despite the growing bearish pressure, there is still a chance that Ethereum price can break out of this downtrend. As with anything bearish, the key lies in the $3,900 support and how long it holds.
If the bulls are able to regain this support and sustain it, it could invalidate the emerging bearish setup. In this case, cryptocurrency analysts believe that Ethereum price could cross the 0.618 Fibonacci retracement level and resume its uptrend.
Featured image from Dall.E, chart from Tradingview.com
