Data from Santiment showed a dramatic increase in transaction volumes for Ethereum in the past two days. Moreover, the number of addresses at a loss on the Ethereum network reached a new ATH, which was a particularly bearish development. Do such vast losses mean that a relief rally is just around the corner, or is more pain in stock for investors?
In other news, the Ethereum merger was likely to arrive in the coming weeks, but can this positive news save the bulls?
ETH- 12 Hour Chart
The $1800-$1950 area (cyan box) acted as an area of demand last June and July, and the price was able to rally from these lows to set new ATHs at $4800. Can the same feat be repeated?
It is possible, but there are a lot of things that need to go in the direction of the bulls for such a scenario to happen again. As it stands, inflation fears and falling global stock indices have had a negative impact on the crypto market.
The market structure of ETH appeared to flip bullish, for a few brief days in March, but the price fell back below the $3300 mark and, quickly thereafter, the $3000 mark as well. This development meant that the previous downward trend was not quite broken.
As it stands, the $2280 and $2500 levels are likely to be strong resistance levels for Ether in the coming weeks. The demand zone just below $2,000 could give a positive reaction in the coming days, and a bounce towards $2,200 could occur.
Rationale
Even as the prices formed lower lows, the RSI made higher lows (marked in white). This was a bullish divergence that could produce a bounce in price, alongside the confluence with the demand zone. However, the 33 mark on the RSI has been important in the past, and it would need to climb above in order to resemble the bounce in late January. In that instance, once the RSI climbed out of the oversold territory and retested 33, the price began to climb from $2400 to $3200.
The Awesome Oscillator was also well below the zero line to show the bearish momentum was strong, and the OBV also saw a massive drop in recent days to highlight the strength of the sellers.
Conclusion
A divergence would not be enough for the trend to reverse, and this market was not yet ready to establish a bullish trend. Lower timeframe traders can look for shorting opportunities, while investors would need to wait patiently for an opportunity to buy the asset.
