Ethereum’s recovery is an indication of a temporary halt to heavy selling activity in October and not a solid indication of renewed purchasing interest.
Liquidation events occurring in the last week of October were responsible for pushing Ethereum [ETH] down to $2,177.45. At that point, the selling, which had been forcing prices downward, seems to be easing.
Subsequently, buying pressure lifted the price to $2,339.36, up by 2.28%. Nonetheless, the overall trend in ETH, as shown by the four-hour chart, continues to be comprised of lower highs and lower lows.
Therefore, this simply implies sellers are clearly still in charge.
Now the recovery faces potential resistance at the 50% Fibonacci level at $2,360.70. A successful breach of this level could propel ETH towards $2,403.95, where sellers will likely protect the larger downtrend.
On the other hand, if sellers fail to defend the uptrend at the $2,360.70 level, they may send ETH back down toward the $2,263.94. Weaknesses in trading volumes indicate that buyers have not made serious commitments to capital in support of their purchases.
Still, this reflects momentum recovery after heavy selling, not necessarily renewed demand. If ETH fails near resistance, sellers could push it back toward $2,263.94 and potentially $2,177.45.
Ethereum sentiment remains weak
Currently, the Fear and Greed Index stands at 35 as of the 4th of November. Since this places sentiment well within fear territory, it is logical that many investors remain unwilling to invest in ETH.
Although ETH is presently trading around $2,270, as evidenced by ongoing weakness in trading volumes. This hesitation could weaken recovery attempts and increase the risk of further selling.
Weakness among investors should make future selling easier, hence increasing the likelihood of a downturn in the price of ETH.
However, persistent fear can also create opportunities for accumulation as prices attract longer-term buyers.
Scores ranging from 25 to 49 represent an uncertainty where the selling pressure may decrease but does not trigger an immediate surge in buying demand.
Therefore, a sustained improvement in sentiment would likely support the outlook for Ethereum’s recovery effort.
ETH faces rising liquidation risks
Given investor sentiment remains negative, ETH’s next move may hinge upon where leveraged positions hit liquidation. The largest liquidation cluster is situated between $2,330 and $2,350.
In the event of a breakout in this area, short sellers would be forced to close positions through auto-buy orders.
Liquidity above $2,370 could reduce the impact of a rally above this level if the rally reverses upon reaching the top of this zone. Moreover, it could begin to put pressure on longs who are holding leveraged longs below $2300.
Meanwhile, once the zone of $2275-$2285 is broken, it could open up the possibility of forced selling of ETH toward $2250. If ETH is unable to hold above $2250, it could fall down through another liquidation pool near $2209-$2210, deepening downside pressure.
Final Summary
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Ethereum has rebounded from $2,177, but weak demand and fear sentiment continue to limit recovery.
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ETH faces liquidation risks between $2,275 and $2,350, with a breakout potentially driving prices toward $2,400.