Ethereum (ETH) surged to a multi-week high above $2,800 on August 24 as the broader cryptocurrency market rallied, but has since retraced slightly, dropping 0.6% in the last 24 hours to $2,742 at the time of writing.
Whale Alert data revealed that some large ETH holders might be taking profits, as evidenced by a recent $34 million ETH transfer to Coinbase by one whale.
With trading volumes down 18% according to CoinMarketCap and bearish indicators emerging, the question arises: where is ETH headed next?
Ethereum's Relative Strength Index (RSI) has dropped to 42, indicating a bearish momentum with sellers entering the market. The RSI line forming lower lows and crossing below the signal line further confirms this bearish trend.
Additionally, the Directional Movement Indicators (DMI) show that bears are currently in control, with the +DI (blue) below the -DI (orange), though the weak bearish trend is indicated by the Average Directional Index (red) at 14.
Should the bearish trend persist, Ethereum could test the 0% Fibonacci level at $2,718. A failure to maintain this level might lead to further declines.
On a positive note, Ethereum exchange reserves have hit record lows after a spike on August 5 when prices crashed, according to CryptoQuant. Low exchange reserves suggest reduced short-term selling pressure and a lower likelihood of significant price drops. The drop in the Ethereum exchange supply ratio this month indicates that traders are less inclined to sell at current prices.
Further indicating increased investor interest, Ethereum’s open interest has risen from below $10 billion in early August to over $11.5 billion, as reported by Coinglass. However, with a long/short ratio of 0.92, it appears more traders are opening short positions, anticipating a potential price drop for ETH.
