Disclaimer: The information presented does not constitute financial, investment, trading or any other advice and is solely the opinion of the author
ETH was in a short-term price correction.
It could retest the $1,247 support or drop lower.
A pattern breakout to the upside would invalidate the bias.
From Bitcoin [BTC] attempt to break the $17K resistance on January 4 tipped Ethereum [ETH] to aim for the $1,300 mark. However, BTC was rejected at $16.95K, blocking ETH’s rally at $1,270.
The price action over the past few hours formed a descending triangle pattern on the 2 hour chart next to a flagpole that could be considered an overall bullish pennant pattern.
Investors should be cautious, however, as technical indicators failed to signal any bullish momentum in the coming hours.
Read Ethereum [ETH] Price prediction 2023-24
A bullish pennant: is an upside breakout likely?
A pattern break to the upside and associated gains were unlikely as suggested by technical indicators.
In particular, the On Balance Volume (OBV) fell, limiting buying pressure. The RSI had also gradually pulled out of the overbought zone and was near the midpoint, indicating that buying pressure had eased.
Although the Chaikin Money Flow (CMF) moved above the zero limit, it moved sideways and remained close to the neutral level. It showed that buyers had the upper hand but had no excellent leverage to control sellers.
Therefore, sellers could push ETH lower to retest $1,247 support or 26-period EMA of $1,246.39. However, a bearish BTC could push ETC even lower towards a pattern breakout near the bearish target of USD 1,234.15.
But a convincing pattern breakout on the upside would invalidate the bias. Such an uptick will target the $1,265.49 target, but bulls have several obstacles to overcome.
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ETH saw increasing demand in derivatives markets
Despite the price correction, ETH still registered increased demand in the derivatives markets, as evidenced by a positive and increased Binance Funding Rate for the ETH/USDT pair.
In addition, the daily active address remained relatively unchanged despite the dip in OBV on the 2-hour price chart.
Therefore, investors should follow a convincing CMF break below the zero mark to confirm a further downtrend before entering short positions. In addition, a bullish BTC would nullify the bias and tip ETH for an uptrend; so also worth following.
This post Going short on Ethereum in 2023? Here’s what you need to know
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