Ethereum (ETH) is showing early signs of a potential bullish trend as it forms a W-pattern on its weekly chart, which could set the stage for a significant price rally. At the time of writing, Ethereum is holding firm above the key support level of $2,947, a critical price point that serves as the neckline of this pattern. If Ethereum can maintain this level, it could trigger a move toward higher price targets, potentially reaching $4,103, $4,788, and even $5,568.
The $2,947 support level is crucial in determining whether Ethereum will maintain its upward momentum. For the bullish W-pattern to play out, Ethereum needs to continue holding above this level. If ETH stays above this support zone, the pattern will remain intact, creating an opportunity for a breakout toward the next resistance levels.
A clear breakout above the neckline resistance, currently around $3,200, would confirm the trend reversal and open the door for a rapid price increase. However, if Ethereum fails to hold the $2,947 level, it risks a downturn that could test lower support levels and potentially invalidate the bullish scenario.
Ethereum’s Relative Strength Index (RSI) currently stands at 46.15, indicating that the market is in a neutral state with neither buyers nor sellers dominating. The RSI hovering around its midpoint suggests that there is no strong bullish or bearish pressure at the moment.
For Ethereum to gain bullish momentum, the RSI needs to rise above the 50 mark, signaling that buyers are taking control. If the RSI fails to cross this threshold and drops below 40, it would indicate an increase in selling pressure, which could put the $2,947 support at risk and potentially lead to a price pullback.
The Market Value to Realized Value (MVRV) ratio for Ethereum is another key metric to consider. Currently, the MVRV ratio is near neutral levels, suggesting that Ethereum is neither overvalued nor undervalued. Historically, when the MVRV ratio exceeds 1.2, Ethereum has seen selling pressure, whereas a ratio below 0.8 typically attracts buying interest.
As Ethereum pushes toward higher price targets, it’s important to watch for potential overvaluation. If the MVRV ratio enters overbought territory, it could trigger caution among investors and lead to a correction. Traders should stay alert to changes in this ratio as Ethereum’s price moves upward.
The long/short ratio for Ethereum is another important indicator to track. Currently, 84.94% of accounts are long on Ethereum, showing a strong bullish sentiment in the market. While this signals confidence in the cryptocurrency, it also suggests a concentration of long positions, which could lead to price corrections if sentiment shifts or liquidation events occur.
A high number of long positions increases the risk of a sharp pullback, especially if there is a sudden change in market conditions. Traders should be mindful of the potential for short-term volatility if long positions begin to unwind.
Ethereum is at a critical juncture, with its W-pattern suggesting that a bullish move could be in the cards. Key support at $2,947 must hold for this pattern to fully play out, and a breakout above $3,200 would pave the way for further price appreciation.
However, with indicators such as the RSI, MVRV ratio, and long/short ratio providing additional context, it’s important for traders to remain cautious. While the market sentiment is largely bullish, the risk of overvaluation and potential corrections remains. As Ethereum approaches new price targets, it will be essential to monitor these technical indicators to gauge the strength of the ongoing trend.
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