The 4-hour market structure is bearish. Buyers can wait for a deeper pullback, while sellers eye the $1,680 mark.
Ethereum has shown substantial volatility over the past week, as the price fluctuated from $1,555 to $1,714. January had been bullish, but that momentum seemed to be waning in the past week.
A break beyond $1,680 will likely see ETH bounce up to $1,760. In the coming weeks, that move could extend as far as $2,000 as well.
The short-term outlook is not as strongly bullish. Traders looking to buy the asset can either wait for a further drop, or wait for an SFP at $1680 to enter short positions.
From a risk-reward perspective, a break above $1,680 and a retest would require careful planning, as well as risk management from a bull’s perspective.
Imbalance, Order Block, and A Support Level, Offer Some Confluence
The H4 structure turned bearish when the higher low set on February 3 at $1,625 was broken on February 5. This break downward caused the H4 FVG (white) to be retested. A shallow drop in the FVG might not be enough to effect a strong move higher.
The RSI was at 46 and was showing weak bearish momentum. The CMF stood at +0.05 and was on the verge of showing a strong flow of capital into the market, which was a bullish finding.
Beneath the inefficiency was a bullish 4-hour order block (red), which was converging with a horizontal support level at $1,565. While blind bidding may not be the solution, the bulls can expect a bullish reaction in the $1,560 area.
A breakout of the bullish 1-hour chart structure around this area could give buyers enough confidence to enter a long position with a target of $1,680. The stop-loss can be set below $1,535.
From a risk-reward perspective, a break above $1,680, as well as a retest, would require careful planning and risk management from a bull’s perspective.
OI and Spot CVD Decline Alongside the Price, When Will a Recovery Start?
Open interest increased during times when the price experienced short-term surges. Similarly, the OI pulled back when the price fell lower.
This meant that the majority of the market preferred not to fade the ETH pumps on shorter time frames and highlighted a bullish bias. However, a sharp rise in OI along with prices would be needed to initiate the next leg higher.
Liquidation data showed $5.3 and $2.99 million in long positions liquidated on February 5 within two hours of trading.
Longer sell-offs can be expected if the price reaches $1,560, and a rise in this metric, followed by a strong move back above $1,590, may alert buyers that a local bottom has been hit.
Meanwhile, the CVD point has fallen in the last two days. This was in line with the drop that ETH experienced in the same period.
By Audy Castaneda