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Ethereum (ETH) bounced off the $1,660 resistance area on January 21 and has been declining ever since. Probably, the price is correcting before a new phase of growth
ETH is the second largest cryptocurrency by market capitalization. This is a native coin of the Ethereum blockchain, one of the creators of which is Vitalik Buterin.
As the results of the technical analysis show, since the beginning of the year, the Ethereum rate has been growing vigorously. On January 11, the market broke through the $1350 resistance area and the descending resistance line that has been on the chart since August 2022. After that, ETH updated the January high at $1680, but then began to lose ground.
The key area of resistance is now represented by the Fibo level of 0.618 correction and horizontal resistance in the $1660 area. Despite hitting a high, Ethereum failed to close above that level. Instead, the price bounced (red icon) and began to decline.
The nearest horizontal support is represented by the $1350 area. However, the path to it is covered by the Fibo level, and it can potentially contain the decline and become a springboard for a reversal.
Despite the bounce, ETH formed a bullish candle on January 25 and may be preparing for another attempt at a bullish breakout now.
Source: Trading View
Although the price dynamics looks quite contradictory, wave analysis shows bullish signals for Ethereum. According to his results, ETH is now in wave 4 of a five-wave bullish structure with an extended wave 3 (in black). After the formation of wave 4 is completed, a new phase of growth can be expected.
Precise targets can be set only after the completion of wave 4, however, as a preliminary target, we assume the area of $1812 (2.61 extensions of wave 1, white). The next target will be $2097 (3.61 extensions).
The most likely level for the completion of the 4th wave is the Fibo level of 0.382 correction at $1478. Here the market will also test the strength of the previously broken channel resistance line. However, the growth of Ethereum over the past 24 hours also indicates the likelihood that wave 4 has already formed a bottom. In this case, the price may consolidate inside the short-term triangle and then make a bullish breakout of it.
ETH may drop a little more than these estimates, but only the absorption of the wave 1 high at $1244 (red line) will completely cancel this forecast. In this case, a further fall below $1200 is likely.
Source: Trading View
Thus, the most likely short-term forecast for Ethereum suggests a decline to $1478, after which the currency will launch an aggressive growth. Closing the day above $1,660 will signal the end of the correction and upside potential to at least $1,800.
Earlier, the editors of BeInCrypto said that the developers of the project successfully launched a “shadow fork” of the Shanghai update in order to test it on the version of the Ethereum main network.
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