Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion
- ETH was experiencing a short-term correction in its price.
- It could test the $1,247 support again or fall lower.
- A pattern breakout on the upside would invalidate this bias.
Bitcoin’s [BTC] Try to break the $17K resistance by tipping 4 January Ethereum [ETH] To aim for the $1,300 mark. However, BTC faced rejection at $16.95K, blocking ETH’s rally at $1,270.
The price action over the last few hours created a descending triangle pattern in the 2-hour chart along with a flagpole which could be considered an overall bullish pennant.
However, investors should be cautious because technical indicators didn’t indicate bullish momentum in the next few hours.
Read Ethereum’s [ETH] Price Prediction 2023-24
A bullish pennant: Is an upside breakout likely?
Source: TradingView ETH/USDT
Technical indicators suggest that a patterned breakout to the upside with associated gains is unlikely.
Particularly, the On Balance Volum (OBV) fell, which indicates that there was less buying pressure. The RSI was also slowly falling from the overbought region and was close to the midpoint, indicating that buying pressure had eased.
The Chaikin Money Flow, (CMF), crossed the zero mark but it moved sideways and remained at the neutral level. It indicated that buyers had the upper hand, but not enough leverage to keep sellers under control.
Sellers could push ETH lower in order to retest $1.247 support or the 26-period EMA at $1,246.39. ETC could be pushed lower by a bearish BTC to make a pattern breakout at the bearish target $1,234.15.
However, a convincing pattern breakout on the upside would discredit the bias. This upswing will target the $1265.49 target but bulls must overcome many obstacles.
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ETH saw increased demand from derivatives markets
Source: Santiment
ETH continued to see increased demand in the derivatives market despite the price correction. The Binance Funding Rate (ETH/USDT) was positive and higher.
The daily active address also remained fairly unchanged, despite the OBV drop on the 2-hour price charts.
Investors should therefore monitor any convincing CMF breaks below the zero mark to confirm another downtrend, before taking on short positions. A bullish BTC could also invalidate the bias and tip Ethereum for an uptrend. This is worth monitoring.