TLDR:
- Ethereum price corrected from $2,580 zone and tested $2,320 support
- ETH is trading below $2,500 and the 100-hourly Simple Moving Average
- Negative exchange netflows suggest accumulation despite price drops
- May 16 saw the largest ETH withdrawal from exchanges since early April
- Taker sell orders vastly outweigh buy orders, indicating increased selling pressure
Ethereum has been facing challenges in recent days, struggling to maintain momentum above key resistance levels. The second-largest cryptocurrency by market cap has experienced a notable correction, dropping from $2,738 to around $2,426 within a five-day period, representing an 11.5% decline.
The price correction began as Ethereum failed to break through the $2,520 resistance level. Unlike Bitcoin, ETH started a downward trend, trading below both the $2,500 and $2,440 support levels.
Bears pushed the price below the 50% Fibonacci retracement level of the upward move from the $2,308 swing low to the $2,509 high. However, buyers remained active near the $2,400 zone, preventing further decline.
Currently, Ethereum is holding steady above the 61.8% Fibonacci retracement level of the recent upward movement. The price is trading below $2,450 and the 100-hourly Simple Moving Average.
Technical analysis reveals a connecting bearish trend line forming with resistance at $2,540 on the hourly chart of ETH/USD. This pattern suggests continued downward pressure in the short term.
Exchange Activity Shows Mixed Signals
Despite the price drop, on-chain data provides some interesting insights. Negative exchange netflows reinforce the idea that accumulation is taking place during this dip.
May 16 marked a significant milestone, recording the single largest ETH withdrawal from exchanges since early April. This movement of funds off exchanges typically suggests investors are moving their assets to longer-term storage, often interpreted as bullish behavior.
The Coinbase Premium Index, which tracks the price difference between Coinbase (USD pair) and Binance (USDT pair), has shown positive values over the past month. This indicates increased interest from U.S.-based investors, a trend observed since ETH was trading at $1,600.
However, conflicting with this positive signal is the taker buy-sell ratio. The 7-day moving average of this metric has been falling rapidly over the past week, indicating that taker sell orders vastly outweigh buy orders.
As these are market orders, the imbalance implies greater selling pressure. Some holders appear eager to realize profits, which could explain the stalled rally at the $2,800 level.
Volume Patterns Echo December 2024
Market observers have noted similarities between current trading patterns and those from December 2024. The spot volume bubble map shows that trading volume was low during April’s bottom and has been falling consistently over recent days.
December 2024’s trading volume saw a sharp uptick, marked as “overheating,” which was followed by a sharp drop in Ethereum’s price. Current cooling trading volume as ETH approaches the $2,600-$2,800 resistance zone may indicate buyer wariness.
This pattern reinforces the idea that we’re seeing a “market reset” rather than a full trend reversal. The rejection from $2,800 appears to be a temporary correction rather than the beginning of a prolonged bearish phase.
For Ethereum to regain upward momentum, it needs to clear several resistance levels. The first key resistance is near $2,460, followed by the $2,500 level. Breaking above $2,550 could potentially send the price toward $2,580.
An upside break above $2,580 might trigger more gains, potentially pushing Ether toward the $2,700 resistance zone or even $2,780 in the near term.
On the downside, if Ethereum fails to clear the $2,500 resistance, a fresh decline could begin. Initial support is near $2,400, with major support at $2,350. Breaking below this could push ETH toward $2,320, with the next key support at $2,220.
The most recent data shows ETH trading at $2,426, with technical indicators suggesting caution. The hourly MACD is gaining momentum in the bearish zone, and the RSI is below the 50 zone, both indicating short-term weakness.
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