Are we going to see a bullish divergence in the coming weeks?
In a recent development, sell-off in Ethereum (ETH) intensifies below $4,200 amid rising burning activity. As burning activity remains strong on the Ethereum network, even though Ether (ETH) was experiencing a strong sell-off across the board, flirting with the $4,000 handle. The recent EIP-1559 update allows a new burning mechanism that turns Ethereum into deflationary crypto after taking large portions of the second-largest cryptocurrency by market capitalization.
As of yesterday, the burn rate was set at 12,000 coins per day, which equated to more than 930,000 ETHs burned. On the H4 chart, the cryptocurrency continues to plummet below the 200-period moving average, which has been functioning as a dynamic resistance.
Under $3,900, we are in bearish territory
In an attempt to gather momentum above $4,300, the price lost steam and made a new low below the psychological level of $4,000.
At this stage, it is more likely that the bears will continue to push the price lower towards the next barrier to the downside at $3,900, which was a low set on October 28. ETH is bottoming out at the current levels, as the RSI indicator hovers around the oversold levels. It appears that a bullish divergence is developing.
Momentarily, bulls are in the lead
The bull-run could resume in ETH when it cracks above $4,200, which eventually fuels the crypto to test the 50-period moving average at $4,500.
The bearish crossover yesterday did not signal a buyer’s stance. This is why a break above the $4,500 level with a candlestick close could pave the way for a rally towards the $4,720 zone in a first degree.
Considering the optimistic scenario, bulls can catch bids and eventually refresh Ether’s all-time highs, shifting attention towards the crucial barrier of $5,000. A bearish crossover that signals a pro-seller stance will be confirmed after the confirmation of the At this time, there is no bearish crossover that signals a pro-seller stance. Hence, a break above the $4,500 level with a candlestick closure would open the door for further gains toward the $4,720 zone in the first degree.
Consequently, Ether can consolidate above such an area and eventually refresh its all-time highs, shifting its focus towards the critical threshold of $5,000 in the optimistic scenario. It is expected to strengthen once the RSI indicator confirms the bullish divergence.