Ethereum's Bullish Divergence: CMF and Funding Rate Signal Potential Rebound

Ethereum's (ETH) price trajectory has been volatile in recent days, with the cryptocurrency facing headwinds and significant liquidations. Despite the bearish pressure, a bullish divergence has emerged on ETH's daily chart, suggesting a potential rebound and rally back above $3,000.

The Chaikin Money Flow (CMF) indicator on ETH's one-day chart has maintained an upward trend, forming a bullish divergence despite the coin's price decline. At the time of writing, ETH's CMF rests above the zero line at 0.14. This indicator measures the strength of buying and selling pressure by analyzing price and volume over a specific period. When CMF rises while an asset's price declines, it indicates that buying pressure is increasing despite the downtrend.

This divergence signals that ETH traders are accumulating the asset at lower prices, potentially indicating a reversal. A sustained increase in ETH's CMF hints at a price rebound as demand outweighs selling pressure.

Moreover, after several days of negative values, ETH's funding rate has turned positive again. The shift in market sentiment suggests that futures traders are increasingly favoring long positions, indicating renewed confidence in ETH's price recovery. At the time of writing, this stands at 0.0046%.

Ethereum's price decline has caused it to trade within a descending channel over the past few weeks. This pattern is formed when an asset's price moves within a downward-sloping range, creating lower highs and lower lows over time. It typically signals a bearish trend, but a breakout above the channel could indicate a potential reversal. If the demand for ETH soars, a potential breakout could propel the coin's price to $3,249.

On the other hand, a failed breakout attempt could cause a price decline toward the channel's support at $2,553.