Is Ethereum Gearing Up to Retest $3,400? Here are Factors to Consider

Ethereum recently tested $3k but failed to break it as it experienced notable rejections at $2.99k. It retraced and trades slightly below the high.

A bullish close on Tuesdawill mark its second consecutive day of consistent increases. The last time this happened, it broke out from its previous trend.

The current price action is fostering conviction that the asset may be gearing up for another period of uptrend. Price actions on Monday saw it gain over 4%, almost erasing Sunday’s losses. Nonetheless, it is currently up by almost 2%, pulling back the losses.

Since its recovery, indicators and other metrics have flipped bullish. One such is the bollinger bands, which show that the altcoin bounced off the lower band a few days ago.  The asset may surge higher in the coming days, per this metric.

Its next price target may be the middle band at $3,100. However, the likelihood of such a hike is still up for debate. There are some factors to consider to determine whether the current uptick will continue or momentum will wane.

Ethereum Cost Basis

The cost basis model has been used to identify key support levels, such as $2,800, where a rebound is likely. Ethereum recently bounced off the $2,800 level and suddenly flipped bullish. It is worth noting that this is not the first time the asset has rebounded from this level in the last fourteen days.

For example, such an event played out last Tuesday and Wednesday, but the downtrend continued. What makes the recent rebound different is where it happened. Previous price action suggests the $2,800 level is a notable area of demand concentration.

The 1-day chart shows that several downtrends met buyback at the mark. Afterward, the asset retested $3,400.

Aside from the price chart, the cost basis confirms that many investors bought at this level. In fact, it is one of the most densely populated CBs. It means that more investors are willing to defend the mark, as further slips will see holdings flip negative.

In summary, the level is an important one for spot traders. As a result, the likelihood of further increases taking place at the mark is high.

The bid to defend the mark is underway as investors have resumed accumulation. Data from CryptoQuant shows that exchange reserves are currently declining, dropping by .05% in the last 24 hours.

Nonetheless, selling has not dropped to its lowest level, as some traders are moving assets into exchanges. However, it is lower than the rate over the last seven days. A closer look at the flow shows that outflows are not significantly higher than inflows, suggesting that some investors are unconvinced.

Taker Buy-Sell Ratio Flips Positive

Aside from the spot market, the derivatives are also positive. For the first time in almost two weeks, the taker buy-sell ratio flipped positive. The metric’s current reading shows that buyers, or bulls, are edging in this sector.

As the bulls tighten their grip on the market, more short positions will be liquidated. The trend is underway: the bears lost over $20 million in the last 24 hours and even more on Monday.

In a nutshell, the cost basis, bollinger bands, and derivatives suggest the recent uptick will continue. Previous movement and the BB indicate that Ethereum will likely test $3,400 within the next two weeks. 

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