The recent Ethereum price rejection that pushed it back below the $4,000 level has created a concerning trend that could send the price spiraling. The major point of interest lies at the 0.618 Fibonacci retracement level, where the last rejection occurred. Given this, it is likely that the Ethereum price could see more declines in the coming days, although there is still the possibility of the bulls taking over and invalidating the entire bearish setup.
Ethereum Price Is Showing A Lot Of Weakness
The rejection from the 0.618 Fibonacci retracement level marked the start of the decline from the $4,200 level during the last recovery. This rejection resulted in the formation of a lower high on the 4-hour timeframe, and historically, such lower high formations mean that there is more selling pressure piling up for the digital asset.
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As the bullish momentum looks to be fading, it puts the Ethereum price in a precarious position. Crypto analyst The Alchemist Trader explains that the rejection had come with increased bearish volume as investors offloaded their holdings on the market, putting bears in charge once again.
Following this development, the Ethereum price has continued to struggle around $3,900, where the next local support lies. The cryptocurrency has maintained a tentative hold at best on this local support, suggesting that the bulls could indeed be losing ground at this level.
If this corrective phase continues, then the Ethereum price decline is far from over. The current local weakness has put a strain on the support, and if $3,900 fails completely, the next major support lies below $3,400, more specifically at $3,385. This will serve as the next stronghold for the bulls to make their move.
“From a structural perspective, Ethereum’s inability to sustain momentum signals growing bearish pressure across lower timeframes,” the crypto analyst explained.
The Case For ETH Bulls
Despite the mounting bearish pressure, there is still the possibility that the Ethereum price could break out of this downtrend. Just like with the bearish case, the key lies at the $3,900 support and how well it holds.
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In the case that bulls are able to reclaim and hold this support with momentum, then it could invalidate the bearish setup that has emerged. In this case, the crypto analyst believes that the Ethereum price could resume its uptrend above the 0.618 Fibonacci retracement level.
Featured image from Dall.E, chart from Tradingview.com