Ethereum In Red; ETH Options Suggest $3K Is New Support

• ETH price has dropped by 7% in less than a day, showing bearish sentiment.
• Sellers have won the recent short-term consolidation phase.
• Ethereum price has been hovering between the 20-day EMA and 200-day EMA.

Ethereum (ETH) price has faced resistance from the supply zone of $4K and experienced selling pressure. ETH declined by 23% from the first week of December and has dived below the support level of $3.3K.

Based on the chart structure, the ETH price has formed a bearish candlestick pattern which might attract sellers. The price was about to fall below 20-day EMA which showcases the sellers’ grip.

Ethereum Price Has Shaped Head & Shoulder Pattern

Ethereum crypto was trading at $3,070.00 at press time which has dropped by 6% in an intraday session. The market capitalization was $370.44 Billion and ranks 2nd in the cryptocurrency market. The 24-hour trading volume has surged by 87% to $20.44 Billion.

The price chart shows an incomplete right shoulder. While making this pattern, the price has lost the 20-day EMA and is likely to lose the 200-day EMA.

Once the price dives below the 200-day EMA, sellers might dominate ahead. Suppose the price sustains below the 200-day EMA, most trades and investors might prefer to book profit. Here, profit booking might drag down the price to the major support zone of $2.3K.

Conversely, if the price of Ethereum takes support on the 200-day EMA, sellers may prefer to exit. Suppose the price forms any bullish candlestick pattern on the 200-day EMA, buying momentum can be anticipated. If the price falls from the 200-day EMA and exceeds the 20-day EMA, it could enter the supply zone easily.

The RSI has triggered a death crossover with the RSI-based moving average. The MACD and the Signal line have slipped below the Zero line. Moreover, the histograms have turned to red is a bearish signal.

ETH Options Chain Analysis

The options market for Ethereum, however, displayed a concentrated trading pattern, especially around specific strike prices, which emphasized traders’ speculative and defensive tactics.

With 1,267 contracts and a notional value of $4.12 Million, the $3,000 put option was the most active and thus a key defensive weapon.

It was difficult for ETH to challenge the $2800 level because this option was viewed as a safety measure, expressing the belief that this level must not be broken.

On the other hand, there was a lot of interest in the $5,500 call option, which had 1,065 contracts and a $3.53 Million notional value. This suggests that Ethereum’s future is bright.

ETH Price Forecast Amid Recent Fall

Ethereum is currently facing significant bearish pressure, having dropped 6% recently and forming a head and shoulder pattern that indicates potential further declines.

The price is struggling to maintain support at key moving averages. Especially the 20-day and 200-day EMAs. Also, there’s the possibility of a drop to major support levels of around $2,000 if the selling momentum is maintained.

Despite strong demand for options at the $3,000 level, the market sentiment remains negative. Technical indicators, including RSI and MACD, suggest a bearish outlook, reinforcing the need for cautious trading strategies as sellers may dominate soon.

Disclaimer

This article is for informational purposes only and provides no financial, investment, or other advice. The author or any people mentioned in this article are not responsible for any financial loss that may occur from investing in or trading. Please do your research before making any financial decisions.