Ethereum’s decline below the crucial $3,700 support level is causing concern among traders and raising questions about the strength of the bulls. The failure to break through the consolidation channel and the inability to sustain upward momentum indicate potential challenges for ETH.
The recent period of consolidation may give the moving average time to catch up with the significant volatility witnessed a few weeks ago. However, if the price continues to decline below the support level, it could signal a need for bulls to regroup as bears gain strength.
Ethereum’s price action is known for its sharp swings, which is characteristic of a volatile asset. The current trend suggests that ETH is struggling to maintain its upward trajectory.
The consolidation phase that Ethereum went through, with fluctuations between support and resistance levels, typically precedes a significant price change. This could be either an upward or downward movement.
If Ethereum fails to hold the 200-day moving average, which is considered a reliable indicator of the long-term trend, a deeper drop could occur. This would increase downside risk in the near term. Additionally, higher-than-average trading volumes during the recent decline suggest increased selling activity, potentially exerting more pressure on the price.
However, the Relative Strength Index (RSI) is currently hovering around neutral, indicating that Ethereum has room to recover if market sentiment improves. It is neither overbought nor oversold.
Overall, the loss of critical support level for Ethereum raises concerns about its future trajectory, but it is not necessarily indicative of a prolonged downtrend. Traders will closely monitor the price action and market conditions to determine if a rally continuation or further decline is on the horizon.