Crypto Twitter has a lot of funny material and memes, especially when prices slump. One that comes to mind is the application form for a job at McDonald’s if Ethereum faced rejection at the $4000 area. Such a rejection might indeed have happened, as ETH broke out past a significant trendline resistance but the momentum petered out around $4050. Will ETH push higher, or will crypto traders become meme material in the coming weeks?
ETH: 12 hour chart
The importance of $ 3950- $ 4050 is no joke. $ 4000 is really resistance to a round number which is at an important point on the charts. The price gravitated to this level to test the strength of buyers and sellers. Once again ETH tested this pocket but a bearish divergence was observed between price and momentum.
Just above this pocket, lay the 23.6% retracement level at $4121, marking another significant level in close proximity for buyers to push against.
The false breakout of trendline resistance to encourage buyers, rejection of significant HTF resistance and a sharp drop – this turn of events will force late buyers ($ 3800 – $ 3900) to sell at breakeven or at a loss. Additionally, the double squeeze could push prices as far south as the 50% retracement level at $ 3287.
Rationale
Double pressure means that the market faces pressure from sellers, and this pressure is reinforced by late, enthusiastic buyers being forced to puke their long positions and sell at loss/breakeven.
The CMF was a good distance above +0.05 meaning that capital flows remained in the market, a bullish sign. However, the MACD remained below the zero line. This indicated that the bullish momentum was not yet strong. The RSI was also unable to climb above neutral 50 and formed a bearish divergence.
Conclusion
Whether Ethereum can consolidate below resistance before another attempt to climb higher, or a double pressure scenario unfolds, remains to be seen. The price action and momentum stall indicated that a bearish scenario could play out.
ETH would then be forced to seek buyers in the $3800 region, failing which, it could drop to $3300 area. However, over the next few days, if there is only a minor pullback, some consolidation, a move past $4050 and a flip of this region, Ethereum would be primed to climb higher in a hurry.
