Ethereum Price Shows Potential for Bullish Breakout: When and How?

Ethereum (ETH) price is showing signs of a potential bullish breakout as it continues to consolidate within a falling wedge pattern. Currently priced at $2,771.52, Ethereum has seen a slight price increase of 0.59% in the last 4-hour period.

Ethereum Price Falling Wedge Pattern Suggests Upside Potential

In the last chart of its trading price, Ethereum has been in a Falling Wedge formation and the pattern attached with it shows a bullish nature. The pattern that is formed is that there are two rising lines. One for price and the other for volume where the price makes lower high and low progressively.

The narrowing range of the wedge suggests that selling pressure is beginning to weaken, with the potential for a breakout to the upside.

For a bullish scenario to unfold, Ethereum would need to break above the upper trendline of the wedge with strong volume. 

A breakout at this point will probably take ETH down to $3,000 range in line with the conventional falling wedge pattern. The target level is determined through the estimation of the width of the wedge and extending it up from the breakout point. Although it has risen rather gradually, Ethereum may still surge to the price, supporting the bull run.

Key indicators, such as the Money Flow Index (MFI), also support a positive outlook. The MFI, which is currently at 59.46, indicates that buying pressure is slightly outweighing selling pressure.

4-hour ETH trading chart| source trading chart

Also, the Relative Strength Index (RSI) that depicts the strength of price activity is at the value of 64.00. Therefore, it can be concluded that Ethereum is in an uptrend. The upward movement has more chances compared to the bearish one.

These are not conclusive in any way, but they co-relate with the probability of a bullish breakout.

Declining Exchange Reserves Could Strengthen Bullish Case

Another argument that can backup Ethereum’s possible future price upturn is the continuing outflow of exchanges’ reserves. The exchange reserves of Ether have been declining from 30 million to 19.3 million over the course of the past year. This supports the idea that investors are transferring their ETH through the exchanges to private wallets or staking services.

Ethereum Exchange Reserve chart

This can be explained by the fact that lower exchange reserves lead to lesser selling pressure. The chances of a price hike are high. Should users seek Ethereum from other sources other than the exchanges as more people get to adopt the platform.

In the past, the deteriorating exchange reserves have led to price recovery to higher grounds. Like the break to the $4,000 and for Ethereum in mid 2024.

Growing Market Activity as Open Interest Increases

Derivatives market of ethereum is also active, searching for a high open interest of $13.0 billion. In the last 1 day, open interest has risen by 7.04% and it signifies that more market players are interacting with Ethereum options.

Open interest was entirely dominated by perpetual contracts where it made up $12.4 billion of the total value. These are contracts that are cross and notwithstanding Ethereum’s price with no expiration date. They remain as the most popular contracts in Ethereum’s market.

The fact that open interest in perpetual contracts is growing speaks about the high interest in Ethereum. Especially for the short to medium term.

Therefore, when the price rises and penetrates the high values such as $2,800 the upside prognosis becomes more probable. Some crucial technical levels are being eyed now. In case of a breakout above $2,800, Ethereum will encourage more accumulation.

Ethereum Price Key Levels to Watch

Currently, the $2,780 level is expected to be the key barrier for Ethereum bulls to break if they are to start a charge higher. Thus, if Ethereum will be able to surpass it, the next significant level of resistance is at $3,000.

If the price could not go above such levels and instead goes below the lower trendline of the falling wedge, then the bullish standpoint might have to be reversed.