Key Takeaways
Ethereum (ETH) has been one of the most disappointing cryptocurrencies in the current market cycle. Despite multiple attempts, the second-largest cryptocurrency failed to break out above the $4,000 level, let alone set a new all-time high.
In December 2024, Ethereum seemed to be well on its way to breaking out but failed to sustain its increase again. It has fallen nearly 40% since, risking a breakdown from a 966-day ascending support trend line.
With that in mind, let’s analyze the ETH price action and see if a reversal could still be on the table.
The ETH price has fallen significantly since reaching its current cycle high of $4,107 in December. At the time, it seemed that ETH had broken out from a descending resistance trend line (dashed) that had existed since the all-time high.
However, the decrease proved to be a deviation (black circle) since ETH declined below the trend line shortly afterward.
On Feb. 3, the ETH price fell to a low of $2,125, the lowest price since June. ETH barely survived breaking its 2024 low of $2,100.
Ethereum bounced by 20% despite the crash after reaching an ascending support trend line that existed for 966 days.
The ETH price also validated the $2,450 horizontal support area, creating a long lower wick.
Despite the bounce, technical indicators are decisively bearish. The Relative Strength Index (RSI) and Moving Average Convergence/Divergence (MACD) are both falling. The RSI just decreased below 50 while the MACD made a bearish cross (black icons).
So, the price action and indicator readings do not align. While the former is still bullish, the latter is categorically bearish.
The daily chart provides a more unquestionably bearish outlook for several reasons. Firstly, the Ethereum price broke down from a descending parallel channel that had a decline since the cycle was high.
This indicates that the downward movement is not corrective, but rather, it is the beginning of a new impulsive decline.
Secondly, the bounce (white icon) did not reclaim the channel’s support trend line.
Finally, the RSI and MACD are both falling and have crossed their bearish thresholds at 50 and 0, respectively. So, the weekly and daily time frames combined give a bearish Ethereum prediction.
As per the wave count, the only remaining bullish Ethereum prediction is that the price just completed wave four in a five-wave upward movement that started in 2018 (white). The black sub-wave count shows a completed A-B-C-D-E formation inside a symmetrical triangle.
If this is the case, the price can still reach a new all-time high, with the 1.61 external Fibonacci retracement resistance level giving a target of $7,331.
However, the count is extremely unusual since sub-wave D moved slightly above sub-wave B while sub-wave E almost broke the lows of sub-wave C.
A fall below the trend line and the $2,125 low will invalidate the count and confirm the trend is bearish. In that case, the entire Ethereum price increase in this cycle would just be a corrective wave B contained inside a massive ascending parallel channel.
The sub-wave count is in black, showing an equally complex corrective structure. Giving waves A:C (white) the same length will lead to a low of $730.
While both the wave counts are unusual based on Elliott Wave rules, the bearish price action suggests a breakdown is the more likely future outlook.
The Ethereum price crashed last week, nearly invalidating any remaining bullish options. While the price action saved the invalidation by bouncing, ETH barely holds above the current support levels.
If ETH breaks below $2,125, it will confirm that the current bullish cycle is over and the bear market has started.