RSI over 70 often signals Ethereum is overbought, which could lead to a price correction. A MACD bullish crossover can indicate a strong uptrend, while a bearish crossover suggests the opposite. When both indicators align, they help traders make more informed decisions on entry and exit points.
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Impermanent loss occurs when the value of assets in a liquidity pool changes relative to each other after they are added to the pool. This happens because decentralized exchanges (DEXs) typically use an automated market maker (AMM) model, where the ratio of assets in the pool must remain constant. If one asset appreciates significantly while the other depreciates, liquidity providers (LPs) may end up with a smaller value of the more profitable asset compared to simply holding it outside the pool. The loss is “impermanent” because if the asset prices return to their original ratio, the loss can be recovered. However, if the price disparity persists, LPs could face long-term losses, making it crucial to carefully assess the risks when providing liquidity.
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Market depth analysis examines the order book to show the quantity of buy and sell orders at various price levels. A large buy order (buy wall) at a certain price indicates strong support, which could prevent the price from falling below that level. If these buy orders are absorbed or moved, it may signal the potential for a price increase. Similarly, a large sell order (sell wall) at resistance levels can halt upward movement. If these walls break, it could indicate a breakout. Traders use market depth analysis to anticipate price movements and identify key levels for entry or exit.
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