Ethereum, the second-largest cryptocurrency by market capitalization, has been closely following Bitcoin’s price movements. The ETH price has regained crucial support at around $3100 after experiencing a low of approximately $2800.
While market participants remain bullish on the cryptocurrency, the ETH price appears to be preparing to trap the bulls at higher levels.
Known for its slow yet steady trading without significant price variations, Ethereum has garnered the optimism of traders who believe the token has a higher chance of achieving fresh highs in the short term.
However, as the ETH price has been trading in a short-term bearish trend, there is a possibility that it may turn bullish to secure higher targets, potentially trapping the bulls.
Ethereum Price Trades Within the Descending Parallel Channel
Following a rejection from its yearly highs, the Ethereum price has been trading in a descending parallel channel. This pattern has presented significant bearish opportunities, with selling volume piling up to a large extent.
However, the formation of an inverted hammer, a red candlestick pattern, suggests a minor chance of a bullish continuation. Inverted hammers are typically considered bullish indicators, as they signify buyers attempting to put more pressure on the market.
The next course of action for the ETH price remains uncertain, as the Directional Movement Index (DMI) is unclear. All levels, including the Average Directional Index (ADX), have plunged, with the ADX heading towards the lower support while the positive directional indicator (+Di) and negative directional indicator (-Di) are on the verge of a bearish crossover.
The trading volume has also been turning in a bearish direction, indicating that further price declines may occur before a major rebound. The potential for an ascending trend and a resistance breakout exists.
