Ethereum Price Analysis: ETH Reclaims Crucial Resistance, How High Can It Go?

The cryptocurrency market is buzzing with optimism following Donald Trump's recent election victory in 2024. Ethereum (ETH) has joined the rally, witnessing a notable price increase of 10%, reaching a critical resistance level of $2,500. A sustained breakout above this level could further enhance bullish momentum.

Technical Analysis

Daily Chart Overview

On the daily chart, Ethereum demonstrated strong buying activity around the $2,300 support level, which aligns with the midpoint of a multi-month descending channel. This buying pressure has propelled ETH towards the 100-day moving average, coinciding with the significant $2,500 resistance zone. Historically, this area has been a point of contention for sellers, marking it as a crucial barrier for Ethereum's upward trajectory.

Should the buying momentum persist, ETH may successfully breach this resistance, potentially triggering a short-squeeze and continuing the upward trend. In this optimistic scenario, the next target for buyers would be the 200-day moving average at $2,800, which aligns with the upper boundary of the channel.

4-Hour Chart Insights

The 4-hour chart reveals an initial surge from the $2,300 support zone, marking the lower boundary of a descending flag pattern. The concentrated buying at this level has brought Ethereum close to a decisive resistance range between $2,600 and $2,800, defined by the 0.5 to 0.618 Fibonacci retracement levels.

This resistance zone represents a significant supply area, which could lead to a short-term consolidation phase as buyers contend with selling pressure. For Ethereum to confirm a bullish trend, a breakout above this resistance zone accompanied by strong trading volume is essential. The price action around this level will be critical in determining whether ETH can maintain its momentum or if it will experience a temporary pause in its rally.

On-Chain Analysis

Ethereum's recent move towards the $2,500 resistance has sparked optimism among investors, many of whom foresee the start of a new bullish rally. Key indicators from the futures market, such as open interest and funding rates, shed light on traders' sentiment and participation levels.

The charts indicate that both open interest and funding rates have shown positive trends during this uptrend, reaching levels higher than in previous months. This increase suggests heightened participation and a generally bullish sentiment among futures traders. While strong participation is crucial for a sustained bull market, excessive optimism in the futures market could pose risks.

Currently, neither open interest nor funding rates have reached concerning levels, indicating room for these metrics to rise without immediate risk. However, a sudden spike could lead to increased volatility and a potential liquidation cascade, causing a swift price drop.

Given these dynamics, investors should exercise caution in the short term, closely monitoring these metrics and managing risk levels to prepare for potential volatility.