Ethereum price shows an interesting development over the course of last week. Despite crashing down, ETH seems to be in a position to show positive returns this week that could push it higher to significant levels.
Ethereum price recovery in progress
Ethereum price crashed 23% over the last month and set a swing low around $2,714. This move formed the second swing high and the third swing low. This downswing was crucial in establishing an ascending parallel channel.
However, drawing a trend line joining the two higher highs and three higher lows shows ascending parallel channel formation. The last two times Ethereum price tagged the lower trend line of the channel, it was followed by a 43% run-up.
Therefore, investors can turn cautiously optimistic at the current position and start accumulating ETH in hopes of a higher move. The parallel channel is the first and the most significant reason why Ethereum price is likely to reverse and undo the losses.
The second reason is the bullish divergence formed between the price’s higher lows and the Relative Strength Index’s lower lows. This setup forecasts a bullish move for ETH and is likely going to propel ETH higher.
Furthermore, using the Fibonacci tool for the 43% upswing from 22 January to 10 February reveals that the upcoming move saturates at a 27% retracement level at $3,554. Using the same logic and applying the Fibonacci tool for the second upswing between 7 March and 3 April, reveals that the target could be $3,856.
Since all of the outlooks are suggesting a bullish outcome, there is a good chance ETH could actually tag the $3,856 target and make its way to the $4,000 psychological level.
ETH Perpetual Futures | Source: Tradingview
Supporting this outlook for Ethereum price is the decline in the supply of ETH on exchanges over the last month. The number of ETH tokens held on these platforms has dropped from 15.24 million to 14.86 in just 30 days, indicating that investors are taking their holdings off exchanges due to their belief in the Ethereum price’s performance.
Supply on Exchanges | Source: Santiment
This indicator coincides with the forecasts from a technical outlook perspective, which adds a tailwind for bulls. Therefore, investors need to be prepared for the next leg-up of Ethereum price.
