Ethereum (ETH) is closing below the $3,950 horizontal area.
There are both bullish and bearish Ethereum counts that are still valid.
Has Ethereum reached its cycle top, or will it rally again this year?
Ethereum (ETH) finds itself at a critical juncture as the price action threatens a breakdown below the $3,950 horizontal area.
Despite multiple bounces at this level, bearish signals are stacking, warning that the ETH could break down.
Ethereum could confirm its bearish trend if the area fails and begins a lengthy downward trend.
Let’s examine the charts and determine the likelihood of this.
Ethereum Price Risks Breakdown
The weekly Ethereum chart shows that the price broke out of the $3,950 horizontal area in August and reached a new all-time high of $4,957.
Even though the price of Ethereum broke out from a three-year horizontal area, it failed to initiate a sustained increase as was expected from such a long-term breakout.
On the contrary, Ethereum’s price rallied for only two weeks after the breakout and has fallen for the other nine, creating several bearish engulfing weekly candlesticks.
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While the Ethereum price fell well below the $3,950 area multiple times, it never closed below it, allowing for the possibility that the decline is simply a retest after the breakout.
Momentum indicators also give a bearish Ethereum price prediction. The Relative Strength Index (RSI) and Moving Average Convergence/Divergence (MACD) are both bearish.
The RSI is below 70, and the MACD has formed a bearish cross (indicated by the black circle). A decline below 50 would be the final confirmation of the bearish trend, which is imminent.
Therefore, the weekly time frame for the Ethereum analysis is bearish, indicating that new lows are likely to occur soon.
Can Ethereum Bounce?
While the weekly time frame is bearish, the daily one suggests a bullish alternative for the Ethereum price.
However, there is no clear structure for the wave four correction, which has also lasted too long relative to wave three.
Wave four is usually short and has lasted almost as long as the extended wave three.
Furthermore, the RSI and MACD are bearish. Therefore, while the wave count remains valid, Ethereum risks invalidating it with another short-term breakdown.
Why Ethereum is Going Down
The count that has the most textbook structure and also aligns with the bearish long-term price action is a W-X-Y correction (red), which has been ongoing since June 2022.
If this is the correct count, Ethereum’s recent rally is a completed A-B-C correction (green), with wave C being 1.61 times the length of wave one.
The long-term proportions also fit, since wave W had the same length as wave Y.
This is the most likely count when combined with the potential breakdown from the $3,950 horizontal area.
Therefore, the Ethereum price still has a chance to invalidate its bearish prediction with a strong bounce, but it must move quickly before a breakdown occurs.
Final Thoughts
Ethereum’s technical analysis leans bearish, with momentum indicators and wave counts pointing toward a potential breakdown.
Still, a quick recovery could shift sentiment and keep the bullish outlook alive.
The coming weeks will determine whether ETH can defend $3,950 or decline further.
Disclaimer:
The information provided in this article is for informational purposes only. It is not intended to be, nor should it be construed as, financial advice. We do not make any warranties regarding the completeness, reliability, or accuracy of this information. All investments involve risk, and past performance does not guarantee future results. We recommend consulting a financial advisor before making any investment decisions.
Valdrin Tahiri is a cryptocurrency analyst and reporter at CCN, specializing in technical analysis with a focus on Elliott Wave theory, on-chain metrics, and fundamental research. He brings over seven years of experience in the crypto space as both a trader and writer.
He discovered cryptocurrencies in 2017 while earning his MSc in Financial Markets at the Barcelona School of Economics, which sparked a deep interest in blockchain and market dynamics. Since then, he’s contributed to top crypto outlets like BeInCrypto and CoinGape.
Valdrin also served as Community Manager of BeInCrypto’s Telegram group for three years, helping grow it into one of the largest crypto communities worldwide. His expertise in market structure and price patterns allows him to break down complex trends into clear, actionable insights.
He’s published thousands of articles covering altcoins, Bitcoin cycles, and macro trends.
