The recent rejection in the Ethereum price, which pushed it back below the $4,000 level, has created a disturbing trend that could cause prices to spiral. The main point of interest is at the 0.618 Fibonacci retracement level, where the most recent rejection occurred. With this in mind, it is likely that Ethereum’s price could see further declines in the coming days, although there is still a possibility for the bulls to take over and invalidate the entire bearish setup.

Ethereum price shows many weaknesses

Rejection from the Fibonacci retracement level of 0.618 clear beginning of decline from $4,200 during the last economic recovery. This rejection has created a lower high on the 4-hour time horizon and historically, such lower highs mean that selling pressure is building for this digital asset.

As the bullish momentum appears to be waning, this puts Ethereum’s price in a precarious position. Cryptocurrency analyst at The Alchemist Trader explains that the rejection came as bearish volume increased as investors unloaded their holdings in the market, putting the bears in the lead again.

Following this development, Ethereum price continues to struggle about $3,900, where lies the next local support. The cryptocurrency has maintained tentative support at best at this local support, suggesting that bulls may indeed be losing ground at this level.

If this recovery phase continues, Ethereum’s price decline is far from over. The current local weakness has strained support and if $3,900 falls completely, the next major support will be below $3,400, or more specifically at $3,385. This will be another stronghold for the bulls to make a move.

“From a structural perspective, Ethereum’s inability to maintain momentum signals increasing bear pressure on lower time frames,” the cryptocurrency analyst explained.

The case of ETH bulls

Despite the growing bearish pressure, there is still a possibility that Ethereum price could break this downtrend. As with the bear market, the key is support at $3,900 and how well it holds.

If the bulls manage to regain and maintain this support with momentum, it could invalidate the bearish trade that has emerged. In this case, the cryptocurrency analyst believes that the Ethereum price may return to its previous level uptrend above the Fibonacci retracement level at 0.618.

Featured image from Dall.E, chart from Tradingview.com