Ethereum reclaims technical support as sentiment started to change in favor of an uptrend

• Ethereum price got caught in a rut as price action started selling off after the Christmas rally.
• ETH price sees headwinds slowly but surely turning into tailwinds which could spark a new uptrend.
• The first target holds 5% of gains with an option for 16% of gains in just a matter of days.

Ethereum (ETH) price has seen a sharp decline in its valuation after the Christmas rally as market participants pulled out their funds, cashing in their profits. Slowly but surely, these same investors are starting to come back to cryptocurrencies as the current discounts, and technical levels are very attractive for rebooting uptrends and rallies. Expect more upside to come once investors shrug off current headwinds and start to look beyond rate hikes from the FED with new all-time highs in stock markets, propelling further gains for ETH towards $3,687 in the short-term.

ETH price holds some low-bearing fruit with 16% of gains near term

Ethereum price sees bears ending short positions as the Relative Strength Index (RSI) enters oversold territory. With bears covering to book their gains, global headwinds starting to fade across the board in global markets, and several assets finding support, it is possible ETH price may start a slow U-turn. Expect XRP price to start grinding higher and delivering a solid bull signal once it breaks out the dotted short-term triangle.

ETH price will tick the $3,391 historical level and then the 200-day Simple Moving Average (SMA) – the first target where some profit-taking is likely to happen. If global tailwinds are persistent, expect a further continuation towards $3,687, another historical level providing resistance, whilst the red descending trend line offers short-sellers a window of entry for another push to the downside. Much will depend on market sentiment and further information on the stance of the FED and its rate hikes for 2022.

ETH/USD daily chart

When global markets hit a curb again, or if US inflation numbers this week set another record, expect the fragile recovery to be broken and Ethereum price to see a sharp turn to the downside, with first a retest at $3,018. Once that level breaks, expect bulls to get kicked out of their positions with stop losses triggered and an accelerated decline to $2,695. A break below the psychological $3,000 level would completely change the outlook, in such a scenario don’t expect ETH to see investors come back anytime soon.

 

---