Ethereum received a positive response from the long-awaited London hard fork. With increased demand, the price has soared, and some on-chain metrics point to a possible correction with profit buying. On this subject, we examine the technical comments of analyst Ali Martinez…
Selling signals are seen on Ethereum (ETH)
Despite the bullish momentum, ETH could be facing an imminent correction. After the price of the leading altcoin broke out of the descending triangle pattern on July 22, it registered an impressive rise. Since then, it has managed to climb above $3,200, up about 60%. However, the analyst expects a drop as the target price has been reached. In this regard, the Tom DeMark (TD) Sequential indicator, which is used for long-term price prediction and has been correct in over 25 cryptocurrencies and Bitcoin predictions in recent years, gives a “sell signal” on the daily chart of ETH. The bearish pattern developed as a green nine candlestick and predicts a one- to four-day candlestick correction or the start of a new downward countdown.
Ethereum’s MVRV adds confidence to the pessimistic outlook
The MVRV value, which gives the fair value of any asset, measures the average profit or loss of all addresses that have purchased ETH over a given period of time based on on-chain metrics. This rate is currently 26% of the 30-day MVRV. It hovers at 58 and averages 26% of all addresses that have purchased ETH in the last 30 days. 58 shows that it is in the snow. On-chain analytics firm Santiment states that the higher the MVRV rate, “the more likely Ethereum holders are to start selling and reduce their risk.”
Therefore, given the significant unrealized profit purchases by ETH investors at the moment, it is concluded that Ethereum is currently in a danger zone. Historical data shows that there could be a spike in profit taking that turns into a short-term correction.
Ethereum has levels where it can find support
IntoTheBlock’s In/Out of the Money Around Price (IOMAP) model reveals that Ethereum has multiple demand zones that can prevent a sudden drop. The initial support zone is between $2,960 and $3,050, where about 320,000 addresses previously purchased over 1.4 million ETH. The second and most important support barrier is located between $2,670 and $2,860. Around this price point, more than 1.12 million addresses bought 2.63 million ETH.
Finally, Cryptocoin. com, the IOMAP model, which we mentioned above, does not show any supply barriers that will prevent the second largest cryptocurrency by market capitalization from progressing further. There is a single demand zone between $3,340 and $3,430, where more than 360,000 addresses hold about 390,000 ETH. This buy zone may have the ability to absorb some of the recent buying pressure, but if ETH can break through this hurdle, the $3,500 resistance could be climbed stronger.