Disclaimer: The following analysis is the sole opinion of the writer and should not be considered investment advice
For Ethereum, the fundamentals remain positive despite the sharp drop in price. On-chain data on Ether holders is incentivized and the Ethereum 2.0 upgrade is eagerly awaited.
On the chart, traders seem to view each bounce on the higher timeframe as a selling opportunity. The old support levels and the demand zone have been continuously shifted to the resistance and the supply zone. This could see Ethereum move back to the $2800 area.
However, if that area also fails to stop the flow, buyers will be heavily discounted as Ethereum is likely to continue to decline with $2300 as a possible target for the bears.
Ethereum – 12-hour chart
Source: ETH/USDT on TradingView
The $4000 area, $3800 area, and more recently, the $3300 area are all areas of demand in the near-term to $4800. However, the pullback from those highs has seen the downsides This zone shifted from demand to supply and has also been retested to provide an opportunity for long periods of time to close their positions. This also presents an opportunity to open short positions on ETH.
The golden bag refers to the 61.8% to 78.6% retracement zone of the Fibonacci retracement levels (yellow). This pocket is usually where the pullback ends and the next run up (or down, depending on the previous trend) can be started.
The 70.7% retracement closely coincides with the support at $2630.
For long-term investors, this bag of gold could be an area where they can look to buy Ether. More risk-averse investors can wait for the trend to reverse before entering the market.
Theoretical basis
Source: ETH/USDT on TradingView
The RSI has been below the neutral 50 level for weeks now. On the 12-hour chart, the RSI attempted to climb above this level but was rejected. At the time of writing, the RSI looks to be moving below the 35 mark. In the past, such a strong drop in the RSI has been accompanied by a sharp decline in the price of ETH.
On OBV, the orange level is the level that ETH has been holding above since October when Ethereum was in the middle of a bull cycle and broke through the $3300 area. At the time of writing, the OBV has returned to this level and has can close a session below that level. The trend on OBV has gone down along with the price.
Inference
Indicators show strong bearish momentum and selling pressure has appeared. The next likely areas ETH could experience a bullish reaction are the $2827, $2632, and $2382 levels.