Ethereum price jumped 4.4% on Friday as investors bought the dip following the Bank of Japan (BoJ) interest rate decision. ETH jumped to a high of $2,950, up slightly from this week’s low of $2,775. This article explains why the token may be on the cusp of a near-term bearish breakout.
Ethereum Price Technical Analysis
The daily timeframe chart shows that the ETH price has been in a strong downtrend in the past few years. It has dropped from the year-to-date high of $4,960 to the current $2,950.
Ether has constantly remained below the 50-day and 100-day Exponential Moving Averages (EMA), a sign that bears have prevailed.
The token has also dropped below the Supertrend and the Ichimoku Kinko Hyo indicator.
READ MORE: Why Did the Crypto Market Crash After the US Inflation Report?
Most importantly, it has formed a bearish flag pattern, which is made up of a vertical line and an ascending channel. It has already moved below the lower side of the channel, confirming that pattern. It is now attempting to retest the lower side, a move that will confirm a break-and-retest pattern, a common continuation sign.
The token has moved below the 50% Fibonacci Retracement level. Therefore, the most likely scenario is that the token continues to fall, with the next key support level to watch at $2,622, its lowest level in November. A break below that support will point to more downside, potentially to the psychological level at $2,500.
ETH Has Some Bearish Catalysts
Ethereum’s price has notable bearish catalysts that may drive it lower in the coming weeks.
One of them is the Bank of Japan, which hiked interest rates to the highest level in over 25 years. It moved the rate to 0.75% and hinted that it will continue the process in the coming months. Historically, crypto prices usually fall when the BoJ hikes interest rates.
Another bearish catalyst is the fact that spot ETH ETFs have shed assets this week. It has had daily outflows for the last 6 consecutive days, bringing the cumulative inflows to $12.3 billion. Over $3 billion worth of ETH coins have left exchanges in the past few months.
Additionally, the Crypto Fear and Greed Index remains in the red, while futures open interest continues to fall. This means that, aside from BitMine, not many people are buying the coin. BitMine has bought 407,331 coins in the past 30 days, bringing its cumulative total to 3.9 million.
Still, in the long term, the coin will rebound due to its strong fundamentals, including its growing market share in key areas such as DeFi and RWA. It will also rebound as investors buy the dip, as they have always done in the last decade.
READ MORE: The Bizarre XRP Price Crash: Why is Ripple in a Freefall Amid the Good News?
