• ETH price displays a near-term bullish picture following a 9% increase since 31 January.
  • On-chain and technical metrics show Ethereum’s uptrend may be temporary.
  • A candle close beyond $3,412 will cancel bearishness through a higher high.

Ethereum (ETH) saw its steep correction stabilizing around a critical support floor. The resulted rally from this barrier pushed the altcoin towards an overhead obstacle, and ETH might face rejection, translating to another downtrend.

ETH Awaits Judgement

Ethereum price displays a pessimistic pattern referred to as a bearish breaker. The technical setup comprises highs at $4,025 on 3 September and $4,867 on 10 November. The altcoin created a demand zone in the $2,789 – $3,167 range before Ethereum moved towards record highs at $4,688.

Though the setup might suggest uptrends, the narrative might shift when Ether violates the mentioned demand zone and form a daily candle close beneath it. Such a move will flip the territory to a bearish breaker.

Any bullish move mostly encounters rejection after retesting the bearish breaker. That means the latest upside move that had ETH rising by 25% from a $2,160 swing low is temporary. Retesting the breaker at $2,789 – $3,167 will catalyze Ether short sellers to force another downside move.

In such a case, the ETH price can revisit the weekly support floor at $2,324. Dire scenarios will see Ethereum dropping lower towards the support level of $1.730 and gather sell-side liquidity beneath the area.

The MVRV Z-score supports Ethereum’s bearish outlook. The on-chain index assesses whether the token is undervalued or overvalued by dividing realized market cap and market cap difference with the market cap’s standard deviation.

MVRV metrics help determine historically overbought, oversold, or fair value levels. The red band shows overbought, and bulls often top at the area before reversing. Meanwhile, a green value shows oversold conditions, attracting long-term holders to accumulate.

The latest downswing had Ethereum at 0.61 MVRV Z-score, the level slightly beyond the green band, highlighting more room for Ether to slide lower.

Though Ethereum appears bearish, a daily candle close beyond $3,413 will invalidate the pessimistic picture. That will lead to a higher high, shifting the narrative to bulls’ preference.

Moreover, it will conquer selling momentum from underwater investors, adding to the bullish outlook. That way, ETH might head high to retest weekly resistance at $3,951 before exploring the psychological barrier near $4,000.