As Ethereum (ETH) tries to make minor inroads toward the psychologically important $2,000 price level, some signs indicate that it might not yet be the time for the cryptocurrency to clear its strong resistance level.
ETH likely to fall again
According to data received on Wednesday, ETH is trading around $1,920 on Binance – the world’s largest crypto exchange with the deepest liquidity and highest trading volume. Notably, ETH’s price has reached the Price Channel resistance zone.
For the uninitiated, a price channel resistance zone is the upper boundary of a price channel where an asset has historically struggled to move higher, often leading to increased selling or profit-taking.
If price repeatedly fails to break above this level, it reinforces the resistance, while a decisive breakout may signal a continuation of the uptrend.
By referencing data from Binance, analysts are better equipped to forecast the price trajectory of the underlying asset as the exchange’s characteristics offer accurate reflection of the market’s actual supply and demand dynamics.
Looking at previous price movements, whenever the price touched the upper boundary of the Price Channel, the upward trend came to an end and profit taking selling pressure emerged.
In addition, although the Fund Market Premium indicator remains in positive territory, suggesting that buying interest in the futures market has not completely disappeared. That said, this parameter in itself doesn’t guarantee further price appreciation.
At the same time, the absence of a significant surge in Fund Volume indicates that the current rally is not being supported by strong new capital inflows.
To explain, Fund Market Premium reflects whether futures traders are actually willing to pay a premium over the spot price, while Fund Volume measures the amount of capital flowing into the market.
A positive premium without rising fund volume suggests bullish sentiment exists, but the rally may lack strong new capital to sustain further gains.
As long as the channel resistance remains unbroken, the technical outlook suggests that, rather than expecting further upside, traders should closely monitor the potential selling pressure that could develop around this resistance area.
Make or break for Ethereum
Although ETH is quietly making its way toward the $2,000 level, some analysts caution that the digital asset is likely trying to trap investors into a bull trap. That said, the constantly rising staking demand points toward real organic growth in ETH’s price.
Other analysts opine that ETH is approaching a so-called make-or-break phase, where it could either rally to $10,000 or crash below $1,000. From an exchange data perspective, declining ETH reserves on Binance are likely to exert further bullish pressure on the cryptocurrency.
