Ethereum Faces Challenges as Bullish Signals Emerge
The leading altcoin Ethereum has been dealing with challenging conditions recently, with increased market volatility and significant liquidations putting downward pressure on ETH.
Despite these obstacles, a ray of hope has emerged in the form of a bullish divergence seen on the daily chart. This development indicates the potential for a rebound and a push back above the $3,000 mark for Ethereum.
Ethereum traders appear optimistic as buying pressure increases, as revealed by BeInCrypto’s analysis of the ETH/USD one-day chart. Despite the recent price decline, the Chaikin Money Flow (CMF) for ETH has been on an upward trajectory, creating a bullish divergence. Currently, ETH's CMF stands at 0.14, indicating growing buying pressure.
This bullish divergence suggests that traders are accumulating ETH at lower prices, hinting at a possible trend reversal. The sustained rise in the CMF signals a potential price recovery driven by increasing demand outweighing selling pressure.
Furthermore, the funding rate for ETH has turned positive again after a series of negative values. This shift indicates a shift in market sentiment, with futures traders showing a preference for long positions, signaling renewed confidence in ETH's recovery. At the moment, the funding rate sits at 0.0046%.
The funding rate acts as a fee exchanged between long and short traders in perpetual futures contracts to keep the contract price aligned with the spot price. A positive funding rate indicates that long traders are paying short traders, reflecting a strong demand for long positions and a bullish market sentiment.
Looking ahead, Ethereum's price decline has led it to trade within a descending channel in recent weeks. While this pattern typically indicates a bearish trend, a breakout above the channel could signal a potential reversal. Should demand for ETH surge, a breakout could propel the coin's price toward $3,249. On the other hand, a failed breakout attempt may lead to a price decline towards the channel's support at $2,553.