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Analysis

Ethereum: Why ETH’s drop below $2.9K shouldn’t worry you

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A bullish reversal from the liquidity pool below $2.9k is expected, but traders should be wary of lower timeframe volatility.
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Ethereum faces bearish pressure, this magnetic zone below $2.9k could be visited
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  • Ethereum has a bearish market structure.
  • The magnetic zone below $2.9k signaled further losses were likely.

Ethereum [ETH] was again trading at the $2.9k support level. It had previously visited this level on the 5th of July. In the following weeks, the bulls drove prices as high as $3.5k before faltering.

Should we expect a bounce to $3.5k this time? The network activity has dropped in recent months, but smart money activity gave a bullish signal. The technical indicators continued to forecast bearishness.

Potential for short-term volatility and an ETH dip below $2.9k

Ethereum 1-day Chart

Source: ETH/USDT on TradingView

At press time, Ethereum was trading at $2916. It had a bearish market structure on the daily timeframe. Below the $2.9k level, the next significant support zone is at $2.6k. The price action showed that such a dip is possible.

The daily RSI was just above oversold conditions and the OBV has steadily slid downward since June. Together they indicated further losses were coming.

The $2.9k support is also the 61.8% Fibonacci retracement level and has been defended since April. Hence, there is a good chance that the bulls manage to defend it again.

Potential for volatility due to a liquidation cascade

Ethereum Liquidation Heatmap

Source: Hyblock

Over the past six weeks, the cluster of liquidation levels at the $2.8k zone has increased. Prices are inevitably attracted to these liquidity pools, making them magnetic zones. Even though $2.9k is a strong support, it is highly likely that the $2740-$2800 region is visited.

Read Ethereum [ETH] Price Prediction 2024-25

A bullish reversal from there is expected, but traders should be wary of lower timeframe volatility.

A day or two of trading to establish $2.7k-$2.8k as support alongside an influx of demand could encourage swing traders to go long.

Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion.

 

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Akashnath S is a Senior Journalist and Technical Analysis expert at AMBCrypto. He specializes in dissecting price action, identifying key market trends through advanced chart patterns, and forecasting both short-term and long-term asset trajectories. His distinct analytical method is grounded in his academic training as a Chemical Engineer. This background provides him with a systematic, process-oriented approach to market data, enabling him to analyze the complex dynamics of financial markets with precision and objectivity. Having actively covered the cryptocurrency space since the landmark 2017 market cycle, Akashnath possesses years of experience navigating both bull and bear markets. This seasoned perspective is critical to his insightful reporting on market volatility and evolution. As an active market participant, Akashnath enhances his analysis with crucial, hands-on experience. This practical application of his technical skills ensures his insights are not merely theoretical, but are also relevant and actionable for an audience looking to understand and navigate trading opportunities. He is dedicated to educating readers on the nuances of technical analysis, empowering them with the knowledge to make more informed financial decisions.
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