Ethereum price is showing an interesting development over the past week. Despite its slump, ETH appears to be able to post positive returns this week that could push it to significant levels.

Ethereum price recovery underway

Ethereum price crashed 23% in the past month and hit a low of around $2,714. This move formed the second swing high and the third swing low. This decline was crucial in establishing an ascending parallel channel.

However, drawing a trend line joining the two highs and the three highs shows the formation of parallel ascending channels. The last two times Ethereum price marked the lower trendline of the channel, it was followed by a 43% rally.

Therefore, investors may become cautiously optimistic about the current position and start accumulating ETH in hopes of a move higher. The parallel channel is the first and most important reason why Ethereum price is likely to reverse and reverse losses.

The second reason is the bullish divergence formed between the higher lows of the price and the lower lows of the relative strength index. This setup predicts bullish movement for ETH and will likely propel ETH higher.

Additionally, using the Fibonacci tool for the 43% rise from January 22nd to February 10th reveals that the upcoming move saturates at a 27% retracement level at $3,554. Using the same logic and applying the Fibonacci tool for the second rise between March 7 and April 3 reveals that the target could be $3,856.

Given that all the outlook points to a bullish outcome, there is a good chance that ETH could reach the target of $3,856 and head towards the psychological level of $4,000.

This outlook for Ethereum price is supported by the declining supply of ETH on exchanges over the past month. The number of ETH tokens held on these platforms fell from 15.24 million to 14.86 in just 30 days, indicating that investors are withdrawing their holdings from exchanges due to their confidence in the performance of the Ethereum price.

Offer on Stock Exchanges | Source: Santiment

This indicator coincides with the forecast from a technical outlook perspective, which adds a tailwind for the bulls. Therefore, investors should be prepared for the next rise in Ethereum’s price.