Ethereum (ETH) dropped about 5% over the past week and is currently trading around $2,176. This plunge comes as the broader crypto market enters a correction phase after the rallies seen in November and early December.
However, ETH price manage to bounce back $2780 as of Thursday.
In fact, Ethereum has actually held up slightly better than Bitcoin this week, which is down almost 7%. When examining the technical analysis on Ethereum’s daily chart, the relative strength index (RSI) currently reads 52.
An RSI reading between 30 and 70 generally indicates neutral momentum neither overbought nor oversold conditions. So the current 52 reading suggests Ethereum could see further downside or consolidation before regaining bullish momentum.
Source: Dex Screener
Popular crypto analyst Bluntz, who has over 230,000 X (former Twitter) followers, commented on the short-term Ethereum price action:
“Beautiful 4h on $eth forming here with divergences on every timeframe from 15min up to 4h, only downside is theres now a clear 5 wave decline so this bounce although should be a nice 7-8% or so from the lows will likely end up being a lower high b wave.”
What Bluntz means is that he sees the potential for a bounce of 7-8% from the recent lows based on bullish divergences on the 15-minute to 4-hour timeframes. However, because the larger degree count is showing five waves down, any bounce at this point may just form a lower high before additional declines.
Trader tradecitypro, writing on TradingView, provided the following insightful analysis:
“Ethereum (ETH) is currently undergoing a correction in the daily timeframe, approaching the Fibonacci levels of 0.382 and 0.5. This zone between roughly $1,914 and $2,024 is significant, as it includes various Fibonacci retracements of different waves and serves as a strong support area (PRZ).
Ethereum Buying Scenarios:
“Entry in PRZ: Enter the PRZ box and look for a candlestick pattern or formation that indicates a bullish reversal. After receiving confirmation, consider buying with a stop loss below $1,914.
Wait for Upward Movement: Wait for Ethereum to show support in this area and move upwards. Consider entering after a breakout above $2,454.”
So tradecitypro sees the $1,914 to $2,024 area as an important potential reversal zone for Ethereum to hold support and base before potentially resuming its upward trajectory.
Specific buy entry strategies include entering on bullish candlestick reversals within the PRZ or waiting for a breakout above the recent swing high around $2,454.
Can Ethereum Continue Its Bullish Momentum?
Looking ahead, if Ethereum bulls can hold the price above support around $2,140, the price may soon regain momentum and test resistance around $2,300. Further holding at that level could see additional upside toward $2,400 over the coming week.
On the flip side, if bears overpower the bulls, the price will likely lose momentum and test support around $2,070. Moreover, continued bear domination could result in a drop toward the major support zone around $2,000 in the near future. So Ethereum price action remains precarious here and could go either way depending on whether bulls or bears gain control.
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