Key Takeaways
Ethena (ENA) plunged almost 90% after its April 2024 all-time high. The correction continued until September, when momentum shifted, and the price finally started to rally.
ENA almost reached new highs in December but fell slightly before doing so.
Even though the decline since these highs is substantial, the price shows preliminary signs of a bullish trend reversal. Let’s examine the charts and see if the ENA correction is finally over.
Ethena’s price created a double top pattern between Dec. 16, 2024, and Jan. 4, 2025. The double top is considered a bearish pattern, leading to downward movements most of the time.
As expected, ENA confirmed the pattern by breaking down from an ascending support line and falling to a low of $0.72 on Jan. 14, a 35% drop from the highs.
While ENA has bounced since, validating the 0.5 Fibonacci retracement support level (white icon), it still needs to reclaim the previous ascending support trend line and $0.85 horizontal resistance area.
The trend cannot be considered bullish until the price closes above these levels.
Despite the ongoing rebound, technical indicators are anything but bullish. The Relative Strength Index (RSI) and Moving Average Convergence/Divergence (MACD) generated bearish divergences (green) before the downward movement.
So, the ENA price has to continue its bounce above the main resistance levels to confirm that the correction is over.
Ethena’s wave count is clearer than its price action, giving a bullish prediction. According to the count, the double-top pattern and ensuing decline were part of wave four in a five-wave upward movement (white). The sub-wave count is in black.
Sub-waves A and C had nearly the same length, indicating the correction was complete.
If the count is accurate, ENA has now started the fifth and final wave to the upside. The main target range for this movement is between $1.70-$1.86. The 1.61 external Fibonacci retracement (yellow) creates the lower portion of this range.
The upper portion is created by giving wave five the same length as waves one and three combined. Both targets represent new all-time highs for Ethena.
After ENA reaches its target, it will likely begin a lengthy correction that retraces a portion of the entire increase that started in September 2024.
The ENA price has rebounded well after its Jan. 14 lows. The level at which it bounced, combined with the wave count, suggests the correction is over.
ENA can confirm this trend reversal by increasing above its previous ascending support trend line, which has now turned to resistance. The target for the top of wave five is between $1.70 and $1.86.