Ethereum’s recent price rejection that pushed it below the $4,000 level has created a worrying trend that could send prices spiraling higher. The main point of interest is at the 0.618 Fibonacci retracement level, where the last rejection occurred. Given this, it is likely that Ethereum price will see more declines in the coming days, although there is still the possibility that the bulls will gain the upper hand and invalidate the entire bearish pattern.
Ethereum Price Shows Lots of Weakness
The rejection of the 0.618 Fibonacci retracement level brand the start of the decline from the $4,200 level during the last rally. This rejection resulted in the formation of a lower high on a 4-hour time frame, and historically, such lower formations mean that there is stronger selling pressure for the digital asset.
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As the bullish momentum appears to be fading, this puts Ethereum price in a precarious position. Crypto analyst The Alchemist Trader explains that the rejection was accompanied by increased bearish volume as investors unloaded their holdings into the market, putting bears back in charge.
Following this development, Ethereum price continued to struggle around $3,900, where the next local support lies. The cryptocurrency has maintained a tentative hold on this local support at best, suggesting that the bulls may indeed be losing ground at this level.
If this corrective phase continues, then the Ethereum price decline is far from over. The current local weakness has strained support, and if $3,900 fails completely, the next major support will lie below $3,400, more precisely at $3,385. This will serve as the next stronghold for the bulls.
“From a structural perspective, Ethereum’s inability to maintain momentum signals increasing bearish pressure on lower timeframes,” the crypto analyst explained.
The arguments in favor of ETH bulls
Despite the increasing bearish pressure, there is still the possibility that Ethereum price will break out of this downtrend. Just like a bearish case, the key lies in the $3,900 support and how strong it is.
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In the event that the bulls are able to reclaim and hold this support with momentum, then this could invalidate the bearish pattern that has emerged. In this case, the crypto analyst believes that Ethereum price could resume its uptrend above the 0.618 Fibonacci retracement level.
Featured image of Dall.E, chart by Tradingview.com
