ETH is gaining 3% daily but is facing critical resistance

Ethereum is seeing increased buying activity near the 100-day moving average at $3.2K, fueling optimism for a bullish breakout.

The asset looks set to challenge the crucial $3.5K resistance zone, a crucial level that could dictate its mid-term course.

Technical analysis

by Cheyenne

Daily chart

Ethereum has consolidated within a narrow range defined by the 100-day moving average at $3.2K and the important resistance area of ​​$3.5K, which is also in line with the upper boundaries of a bullish flag pattern. The recent bounce from the 100-day MA suggests increasing demand, pushing the price towards the upper limits of this range.

A break above the $3.5K threshold would likely indicate a continuation of the uptrend, targeting a high of $4K. However, rejection at this level could lead to a period of increased volatility and possible consolidation near the current range. The next few days will be pivotal in shaping ETH’s trajectory, with a breakout looking increasingly likely given the prevailing bullish sentiment.

4 hour chart

In the lower time frame, Ethereum recently consolidated around the RERERATION 0.5 Fibonacci level ($3.2K), indicating a balance between buyers and sellers. After that, the asset gained upward momentum, slightly breaching the upper bounds of the contested wedge and confirming a short-term bullish reversal.

Despite this progress, Ethereum is facing a strong resistance area at $3.5K, where significant supply pressure could emerge. A possible scenario includes a short increase to this level and a pullback towards the broken upper boundary of the wedge to validate the breakout. If this pullback attracts enough buying interest, Ethereum could reclaim the $3.5K level, setting the stage for a rally towards the $4K resistance area.

The upcoming fundamental action will be crucial, with Ethereum able to clear the $3.5K resistance to determine the sustainability of its bullish momentum.

Onchain analysis

by Cheyenne

The open interest metric, which tracks the number of active futures contracts across all exchanges, has been steadily rising in recent weeks, reaching its highest values. This indicates increased participation in the futures market, as traders open new long positions.

Interestingly, there is a difference between Ethereum price and futures market activity. Despite the significant increase in open interest, the price has yet to break the previous highs, displaying a potential misalignment between market expectations and price action.

High open interest indicates a higher probability of liquidation cascades, which often accompany sudden price movements. This could lead to explosive short-term price action, as the market potentially chooses a decisive direction.

While the direction of the breakout remains uncertain, prevailing sentiment and activity point to a bullish breakout as the most likely scenario. If ETH manages to overcome key resistance levels, it could be a sustained rally phase.