Ethereum Targets $3.4K, But Watch for Potential Bull Trap

Summary:
Ethereum (ETH) is currently priced at around $3,000, which some analysts believe could be undervalued. However, persistent selling pressure from larger ETH holders and an ongoing decline in exchange supplies present challenges. The recent Fusaka upgrade has introduced a new operating model for Ethereum that aims to enhance efficiency. Market indicators show mixed signals, and traders should remain cautious as potential price movements unfold.

Key Takeaways

Ethereum is priced at about $3,000, which some see as undervalued.
Large ETH holders are still selling, adding to market pressure.
The Fusaka upgrade aims to improve network efficiency by separating everyday transactions from settlements.
Indicators signal mixed trends, suggesting cautious optimism for traders.

Mixed signals for Ethereum as structure improves but demand lags

The Upcoming Movement of Ethereum

Ethereum 1-week Chart Source: ETH/USDT on TradingView

Analyzing the weekly chart, we observe that the swing structure remains bullish, indicated by the orange lines. However, the dip below $4.2k in September represented a bearish trend, while the bounce back to the $2.7k demand zone demonstrated weakness among bullish traders. Despite this, the bulls still have the potential to recover.

The Relative Strength Index (RSI) showed bearish momentum when it fell below the neutral 50 in October. The On-Balance Volume (OBV), which had been trending upwards until September, began to decline rapidly. Neither of these indicators suggests a strong immediate bullish scenario, but recent price action hints at a possible positive reaction within the $2.5k-$2.7k demand area, which has produced an 18% increase in just three weeks.

Ethereum 1-day Chart Source: ETH/USDT on TradingView

On the daily chart, we see a continuation of the bearish trend; however, the move beyond the previous local high of $3.1k indicates bullish potential in the internal structure. This aligns with the weekly bullish swing and might mark the beginning of an upward trend.

A significant hurdle exists at the supply zone (red box) between $3,370 and $3,660, which may lead to resistance against ETH bulls if prices approach this level. The OBV has shown weak attempts to rise and the RSI has yet to decisively break above the neutral 50.

Analyzing Ethereum's Next Steps

Low trading volume is raising concerns regarding demand in the market. As much as the daily structure appears bullish, the $3.2k local support might still prevent bulls from igniting a rally. The prevailing market sentiment remains bearish, particularly as Bitcoin (BTC) has not yet approached the psychologically significant $100k mark.

Bullish Trading Setup for Ethereum Traders

Traders should keep an eye on the shorter time frames, particularly the 4-hour and 1-hour charts, for potential bullish trading scenarios. For instance, the $3,014-$3,086 range may present a short-term demand zone, likely leading to a bullish move toward $3.4k.

Final Thoughts

Disclaimer: The insights provided in this article do not serve as financial, investment, or trading advice; they reflect the author's personal opinions.