Ethereum Elliott Wave Analysis: Bullish signals are starting to surface as the price of Ethereum (ETH) demonstrates stability above the $2,500 mark. Technical analysis is now suggesting a potential shift in trend following what has been a fairly long corrective phase. After an extended bullish run, the broader crypto market has faced considerable uncertainty, with Bitcoin undergoing consolidation and altcoins making attempts to stabilize their positions.
Recent price action shows Ethereum rebounding from a crucial support level near $2,500. This level is particularly significant as it aligns with the 0.5 Fibonacci retracement level, hinting at a possible trend reversal. On February 3, ETH briefly dipped to $2,160 before surging back above $2,500. This price movement left a 17% wick on the 4-hour chart, often interpreted by traders as a strong indication of an impending bullish reversal.
Understanding the key resistance and support levels is crucial for traders and investors. Currently, the immediate resistance lies at $2,881, which corresponds to the 0.382 Fibonacci level. A confirmed break above this resistance could trigger further upward momentum. On the downside, the key support level to watch is $2,503, the 0.5 Fibonacci retracement. Should this level fail to hold, a deeper retracement towards the critical support at $2,125, representing the 0.618 Fibonacci retracement, is possible.
To definitively confirm a breakout, Ethereum needs to overcome the 0.382 Fibonacci resistance at $2,881. Achieving this would provide stronger bullish confirmation, potentially paving the way for continued gains and a move towards the mid-$3,000 range. Conversely, failure to maintain support could lead to a retest of lower levels, with the 0.618 Fibonacci retracement at $2,125 acting as a crucial zone for buyers to defend.
Looking at the broader market structure, we can observe a breakdown from a descending triangle that formed after the $4,100 high. While this pattern initially suggests bearish continuation, the current price action hints at a potential shift towards accumulation, as buyers actively defend key levels and prevent further declines.
Analyzing the Relative Strength Index (RSI) on the 4-hour chart reveals a neutral reading. This indicates that Ethereum is neither overbought nor oversold, providing ample room for additional gains without immediate concern of a sharp reversal. Furthermore, a mild bullish divergence in the RSI suggests that buyers are gradually regaining control of the market.
Delving into the potential wave structure, the 1-hour chart suggests that Ethereum may be forming a new impulsive wave structure. The recent price action implies that wave (ii) has likely concluded at $2,530, and wave (iii) is now potentially in progress. If this structure holds true, wave (iii) could extend towards $3,349, which aligns with the 0.236 Fibonacci retracement of the broader decline. Following this, a potential wave (iv) pullback might bring ETH back to the $3,000 level before a final wave (v) push towards higher levels. If the bullish momentum persists, wave (v) could target the $3,600 range.
In the short term, the primary target for wave (v) lies above $3,349, assuming the bullish momentum remains intact. However, it’s important to consider an alternative scenario. Failure to sustain support above $2,500 could invalidate the bullish outlook. This would potentially drive ETH back towards $2,125 or even lower, underscoring the importance of closely monitoring price action and support levels.
In conclusion, Ethereum’s price is currently at a pivotal juncture, with a decisive move above $2,881 likely confirming a trend reversal. However, market conditions remain uncertain, making short-term price action critical in confirming Ethereum’s next trend direction. Monitoring volume trends will be essential in determining whether the recent rebound has enough strength to push through resistance or if selling pressure will continue to cap gains. Traders should remain vigilant and adapt their strategies based on evolving market conditions.
