Ethereum Price Reverses Bearish Trend: Is a 10% Breakout Next?
Ethereum (ETH) has shown fresh signs of recovery, breaking free from a bearish channel. Over the past week, its price has climbed by nearly 4%, indicating a potential shift from the bearish momentum that has gripped it for months. However, experts suggest that a confirmed reversal depends on Ethereum pushing 10% higher to breach the $3,470 mark.
Key Momentum Indicators Behind This Breakout
Since early October, Ethereum has been trading within a descending channel, a clear sign of a bearish trend where each bounce results in lower highs. But this week marks a significant turnaround. The price has finally broken above the upper trendline, hinting at a reversal of fortunes. The key driver behind this breakout has been a bullish divergence in the Relative Strength Index (RSI). Between October 10 and December 18, Ethereum made lower lows, while RSI steadily rose, suggesting waning selling pressure and setting the stage for the price recovery.
However, the reversal isn’t without its challenges. A hidden bearish RSI divergence has emerged between December 10 and January 5. While Ethereum’s price forms lower highs, the RSI has climbed higher, signaling a short-term pullback or consolidation risk. The next critical level to watch is $3,220. If Ethereum closes below this, it could confirm the bearish divergence and trigger selling pressure.
Whale Accumulation: A Beacon of Strength
Despite the risks, whale activity in the market suggests optimism. Over the weekend, whales added approximately 320,000 ETH to their holdings, representing a $1 billion accumulation at current prices. Such institutional-level investments indicate confidence in Ethereum’s price potential, even as liquidation risks loom large in derivatives markets.
Current data shows long liquidation exposure on the Binance ETH/USDT map hovering at $2.20 billion—more than seven times short exposure. With liquidation clusters forming around $3,150 to $2,850, any pullback could result in forced selling, further pressuring Ethereum’s price. But the whale activity provides a counterbalance, adding stability to the market.
Critical Levels to Watch
For Ethereum to confirm its newfound strength, crossing $3,470 is vital. Such a move would mark a 10% rally from current levels, effectively negating the hidden bearish divergence and opening the door to further highs. Should Ethereum break through this level, traders could see the price move toward $3,910 and even $4,250 if momentum continues to increase.
Conversely, losing support at $2,850 would undermine the reversal narrative, leaving Ethereum vulnerable to further losses. It’s a fine line between confirmation and regression, making these price levels critical for traders to monitor in the short term.
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Conclusion
Ethereum has taken a significant step in reversing its bearish trend, but the path forward remains complex. A decisive 10% move to $3,470 is the key to cementing this reversal and propelling ETH toward further gains. Keep an eye on whale accumulation and liquidation levels to gauge market sentiment and risk. Stay updated on this evolving story to make informed investment decisions in the dynamic world of cryptocurrency.
