Ethereum (ETH) Faces Challenging Period, Struggling to Stay Above $2,000

Ethereum (ETH) is facing a challenging period, struggling to maintain its position above the $2,000 mark. Despite briefly touching this critical threshold

Ethereum (ETH) is facing a challenging period as it struggles to maintain its position above the $2,000 mark.

After briefly touching this critical threshold following the recent Federal Open Market Committee (FOMC) meeting, bullish momentum has quickly fizzled out, leaving Ethereum in a weak state.

Technical indicators, including the Relative Strength Index (RSI) and the Directional Movement Index (DMI), are now signaling increasing bearish pressure, raising concerns about further downside movement.

This article delves into Ethereum’s current market conditions, examining the technical indicators suggesting a bearish trend and exploring the potential price outlook in the coming weeks.

Ethereum RSI Declines After Reaching Overbought Levels

Ethereum’s RSI has dropped sharply from an overbought level of 71 to 46.63, indicating a shift in market sentiment.

The Relative Strength Index (RSI) is a key momentum oscillator used by traders to assess whether an asset is overbought or oversold. Typically measured on a scale of 0 to 100, an RSI above 70 suggests overbought conditions, while a reading below 30 indicates oversold levels.

As the RSI moves into oversold territory, it usually signals that sellers have gained the upper hand and further price declines are likely. Conversely, when the RSI rises into overbought territory, it suggests that buyers are in control and the asset could see further upward movement.

However, it’s important to note that overbought or oversold levels vary depending on the time frame. For instance, an asset might be deemed overbought on a four-hour chart but not on a daily chart.

In the case of Ethereum, its RSI has dropped significantly from overbought levels, suggesting that overbought conditions are quickly receding.

As the RSI drops below 50, it enters neutral territory, indicating a loss of bullish momentum and a potential shift in favor of sellers. This suggests that ETH may undergo a period of consolidation or face further downside pressure if sellers maintain control.

On the other hand, if demand returns and pushes the RSI above 50 again, it could signal a return of bullish momentum, which may lead to a period of upward correction.

DMI Analysis: Sellers Regain Control

Ethereum’s Directional Movement Index (DMI) is also signaling bearish dominance, with sellers regaining control over price action. The ADX, which measures the strength of a trend, has dropped from 24.5 to 17.96, indicating a weakening trend.

The DMI is a technical indicator used to identify the strength and direction of a trend. It consists of three key lines: the positive Directional Movement (+DI), the negative Directional Movement (-DI), and the Average Directional Index (ADX).

When the +DI crosses above the -DI, it typically signals an uptrend, while a crossover of the -DI above the +DI usually suggests a downtrend. The ADX measures the strength of the trend, with higher readings indicating a stronger trend and lower readings signaling a weaker trend.

In the case of Ethereum, the +DI has fallen from 34 to 21.17, confirming a loss of buying pressure. Simultaneously, the -DI has climbed from 11.17 to 23.12, suggesting an increase in selling activity.

Moreover, the crossover of the -DI above the +DI further supports a bearish outlook, rendering the potential for additional price declines or a period of sideways consolidation more likely.

Key Support and Resistance Levels for Ethereum

Ethereum is currently testing crucial support levels as it undergoes a corrective phase. If the current downtrend persists, ETH could revisit key support zones at $1,867 and $1,823. A breakdown below these levels could trigger a deeper decline toward $1,759.

However, if bullish sentiment returns and drives a recovery, the first key resistance level to watch will be at $2,000. Breaking above this zone could pave the way for further gains toward $2,100 and $2,200.

If bearish sentiment continues to dominate and pushes ETH below $1,700, it could reach its lowest level since October 2023.

Can Ethereum Surge 30% in the Coming Months?

Despite the current bearish outlook, analysts remain optimistic about Ethereum’s long-term potential. Several factors could contribute to a strong recovery and a possible 30% surge in price.

Institutions are increasingly allocating funds to digital assets, recognizing the growing relevance of cryptocurrencies in the financial landscape.

As institutional participation rises, it could exert significant buying pressure on cryptocurrencies, potentially driving up prices.

Ethereum is also set to undergo several network upgrades in the coming months, which could enhance the blockchain's capabilities and attract broader adoption.

These upgrades, such as the Shanghai upgrade and the next hard fork, are expected to introduce new features and optimizations