According to CryptoPotato, Ethereum's price has been undergoing a correction for the past few weeks after a decisive rejection from the $4,000 resistance level in March. However, the market may be on the verge of a U-turn. The daily chart shows that the price has been forming a large descending channel pattern since the correction began. The lower boundary of the channel has recently been tested, pushing Ethereum to the upside. The market has also remained above the $3,000 support level, leading investors to anticipate a rally towards the $3,600 resistance zone in the short term. However, as long as the channel remains intact, further bullish continuation is not expected.
The 4-hour chart further clarifies the recent price action. The $3,000 support level has prevented the price from dropping further, and the market appears to be forming a bottom. The cryptocurrency is currently moving towards the midline of the descending channel, and a breakout above would pave the way for the price to challenge the $3,600 resistance level once again. With the Relative Strength Index showing values above 50%, the momentum also seems to favor a bullish move in the coming days.
The impact of futures market sentiment on significant price movements is significant, as the intensity of long and short positions, along with the possibility of substantial liquidations, serves as a primary catalyst for market volatility. Open Interest, which measures the number of open perpetual futures contracts across various cryptocurrency exchanges, is a key indicator in assessing this sentiment. In light of Ethereum’s recent downtrend, it is noteworthy that the Open Interest metric has followed a similar trajectory, experiencing a substantial decline. This alignment suggests a slowdown of activity within the futures market. As a result, Ethereum appears poised for the resurgence of either long or short positions, potentially initiating a fresh and decisive market movement in either direction.