- Ethereum forms a bullish reversal pattern with key resistance and support levels.
- Sustained exchange outflows suggest a potential supply squeeze and rising demand.
Ethereum (ETH) is currently trading at $3,433, experiencing a 2% decline in the past 24 hours with trading volume down 18%. Over the last week, the asset has dropped by 7%, and on December 20, it fell below the support zone of $3,101, a level not seen for over a month. The daily Relative Strength Index (RSI) stands at 44, indicating that Ethereum is approaching oversold conditions. This suggests the possibility of a short-term rebound if buying interest returns.
Ethereum’s price chart forms a Descending Right Angle Broadening formation, often interpreted as a bullish reversal pattern. This structure consists of two diverging lines—one acting as horizontal resistance and the other as a bearish downward-sloping support. The pattern resembles an inverted ascending triangle, a setup that often leads to upward price movements once it breaks above resistance. Key levels to monitor are resistance at $3,713 (R1) and $4,159 (R2), with support at $3,136 (S1) and $2,953 (S2).
Meanwhile, Ethereum’s on-chain data reflects a significant reduction in exchange supply. Following last week’s record-breaking net outflow of $1.2 billion—the largest exchange withdrawal in Ethereum’s history—another $35.93 million worth of ETH has been withdrawn from exchanges since the start of the week, according to Coinglass. This decline in available ETH and sustained negative exchange netflows could result in a supply squeeze, as demand increases while availability shrinks.
Funding Rates and Market Sentiment
Ethereum’s funding rate has moved into positive territory at 0.0089%, indicating that long traders are becoming more dominant. This suggests a shift in market sentiment towards bullishness.
ETH is currently trading above the Ichimoku Cloud, a technical indicator that signals strong support. However, should bearish forces regain control, Ethereum could see a decline toward $3,111, with a potential dip below $3,000 if selling pressure intensifies.
