- Ethereum’s recent rally has propelled it toward the $2.9K resistance level, but caution is advised as whale selling pressure and high-leverage positions could trigger a retracement.
- Traders should consider locking in profits and staying alert to potential volatility in the coming days.
Ethereum has surged significantly in recent days, leading the altcoin market with an impressive 47% rally in just five days. This rally has not only defied the five-month downtrend but also spurred a broader bullish sentiment across the crypto market. During this time, Bitcoin (BTC) rose by a more modest 7.9%, causing its dominance to drop from 65.36% to 62.38%, as altcoins gained ground and added $232 billion to the market.
A key driver of this momentum has been Ethereum’s Pectra upgrade, which has attracted both retail and institutional investors. However, alongside the buying frenzy, Ethereum has faced increased selling pressure from whales, with significant deposits flowing into centralized exchanges. This balance of buying and selling creates an interesting dynamic that could affect Ethereum’s price trajectory
Also read: PEPE Soars 87% in One Week: Is Profit-Taking the Next Big Risk?
Currently, Ethereum is approaching the crucial $2.9K resistance level, a price point identified by the 6-month liquidation heatmap as a strong “magnetic zone.” Traders are now questioning whether this rally will continue or if a retracement is imminent. Technical indicators present a mixed picture. On one hand, the On-Balance Volume (OBV) has reversed its downtrend, signaling a shift towards buyer dominance. Additionally, the Chaikin Money Flow (CMF) is reading +0.25, suggesting healthy capital inflows into the market. The bullish momentum is further reinforced by the rising Market Flow Yield (MFY).
However, caution is advised. Despite the optimistic outlook, Ethereum has yet to form a bearish divergence on its 1-day chart, and its path to $2.9K might be blocked by resistance zones or profit-taking. The Fibonacci retracement levels point to a 50% retracement at around $2,774, further strengthening the likelihood of a temporary consolidation before any breakout.
The liquidation heatmap highlights a critical vulnerability: high-leverage long positions. If Ethereum drops to the $2.4K or $2.5K range, many of these positions could be liquidated, potentially triggering a sharp downturn. This suggests that while Ethereum might soon hit the $2.9K resistance, traders should be prepared for possible volatility and consider locking in profits if they anticipate a retracement.
In conclusion, while Ethereum is on a strong upward trajectory, traders should remain vigilant. A move to $2.9K seems likely, but a breakout beyond that level is uncertain without strong support from Bitcoin or macroeconomic factors. For now, consolidation and caution may be prudent strategies for those navigating this volatile market.
