The price of Ethereum (ETH) is set to fall as it approaches its critical resistance level of around $2,843. As of the time of writing on Thursday, it is trading at $2,620, down 3.97%. On-chain data further supports the bearish outlook, highlighted by a positive growth in Ethereum exchange flow balances and a drop in development activity.
Additionally, ETH founder Vitalik Buterin has deposited $534,000 worth of ETH to the Kraken exchange, which could intensify the selling pressure and lead to a bearish outlook for Ethereum in the coming days.
Ethereum price set to drop as it approaches key resistance level
Ethereum is currently revisiting its 50% retracement level of $2,843 (calculated based on the July 22 swing high of $3,562 and the August 5 swing low of $2,124). This retracement level is closely aligned with the daily resistance at $2,927, marking it as a critical resistance area.
If the Ethereum price fails to break above $2,843, it could fall 20% from the current trading level of $2,658 and hit the weekly support at $2,118.
On the daily chart, the Relative Strength Index (RSI) and the Awesome Oscillator (AO) are below the neutral levels of 50 and 0, respectively, suggesting an impending bearish trend.
Santiment's ETH trade flow balance shows the net flow of tokens in and out of exchange wallets. A positive value means that more Ethereum tokens are entering the exchange than leaving the exchange, indicating investor selling pressure. Conversely, a negative value means that more ETH is leaving the exchange than entering the exchange, indicating less investor selling pressure.
In the case of Ethereum, the transaction flow balance surged from -62,018 to 20,707 between Tuesday and Wednesday. This positive growth typically indicates an increase in investor selling activity.
Additionally, Ethereum’s development activity metric tracks the frequency of project development events recorded in public GitHub repositories over time.
A rise in this metric indicates that the project will continually work to maintain, innovate, and improve the protocol, which is generally viewed as positive by investors and stakeholders. Conversely, a fall in this metric may raise concerns about the project’s staying power, ability to innovate, and engagement with the community for the foreseeable future.
For Ethereum, the index fell sharply from 265 on Wednesday to 257 on Thursday, continuing its downward trend since mid-July. This indicates a steady decline in Ethereum development activity and suggests a bearish price outlook.
Despite the bearish signals from technical analysis and on-chain data, if Ethereum price manages to close above the July 29 high of $3,396, it will set a higher high on the daily chart, potentially leading to a 5% rally to retest the July 22 high of $3,562.
