Over the past week, Ethereum's quotes have demonstrated low volatility, maintaining positions within a narrow range. Despite the absence of sharp price movements, the combination of technical charts and on-chain metrics indicates preparation for a significant breakout from the consolidation phase.
In particular, a trend reversal structure is forming in the market against the backdrop of a significant decrease in selling pressure.
Formation of a reversal model and blockchain data
On the daily chart, Ethereum is completing the construction of a classic reversal figure 'inverted head and shoulders'. The neckline of this model is located around $3400. Notably, this line has a horizontal appearance, which usually contributes to a more intense price movement after its breakout.
In the case of a confident close of the trading day above the level of $3400, the technical target of the asset will shift to the mark of $4400. This forecast is based on projecting the height of the graphical model upwards from the breakout point. From a technical analysis perspective, the current configuration appears complete and logical.
Additional support for the optimistic scenario comes from blockchain analytics data. The metric of the change in the net position of long-term holders (Hodler Net Position Change) captures fundamental changes in investor behavior. Since November 26, the volume of asset realization by this group has decreased from 1.1 million ETH to 54,427 ETH by December 23.
Consequently, selling pressure has dropped by more than 95%. Such dynamics are often observed near important market reversal points. When the technical signal for growth coincides with a sharp reduction in supply, a stable foundation for an upward impulse is formed.
Analysis of breakeven levels and resistance zones
To achieve the target indicators for the second largest cryptocurrency by market capitalization, it is necessary to overcome a number of price barriers. An analysis of the distribution of coins by purchase price allows us to identify the most significant supply zones where investors are inclined to close positions at breakeven.
The largest cluster of asset accumulation is concentrated in the range of $3150–$3173. In this interval, about 2.94 million ETH were purchased. Thus, this area is the main obstacle for further growth in the short term.
Securing the price above this zone will open the way to the neckline at the level of $3400. This will require a price increase of approximately 7% from current values. It is important to note that the level of $3150 is confirmed by classical technical analysis as a significant area on the price chart.
In the case of a successful breakout at $3400, the next intermediate resistance will be at the mark of $3480. After overcoming it, the asset may encounter relatively free market space up to the level of $4170.
At the same time, it is necessary to consider the risks of scenario cancellation. If Ethereum loses support at the level of $2800, the current technical structure will be weakened. A drop in quotes below $2620 will completely nullify the bullish formation and confirm a return of control to sellers.
At the moment, the balance of factors is tilted in favor of growth. The combination of a benchmark reversal model, supply shortage, and a clear map of resistance levels indicates a high probability of an upward scenario being realized. The decisive factor will be the asset's ability to overcome the supply wall around $3150.
