Ethereum (ETH) Price Breaks out From 261 Day Resistance — on Track to Hit $4,000

Key Takeaways

• Ethereum broke out from a long-term resistance trend line.
• The price trades only 6% below its yearly high of $4,097.
• Will Ethereum break out, and can it reach a new all-time high?

The Ethereum (ETH) price increased by 46% in November, nearly reaching its yearly high. The price maintained momentum in December, breaking out from a long-term descending resistance trend line.

ETH trades inside the final horizontal resistance area before its yearly high. Can it clear it, and what’s next if it does? Let’s find out.

ETH Price Breaks Out

The weekly time frame chart shows that Ethereum broke out from a descending resistance trend line that had existed since the yearly high of $4,091 in March. Ethereum reached the $3,900 horizontal resistance area,  the final resistance before the all-time high price of $4,951.

Combined with the breakout from the diagonal resistance, a close above $3,900 could likely trigger a rapid increase.

The ETH price has closed well above the 0.618 Fibonacci retracement resistance level at $3,410.

Technical indicators suggest the upward movement will continue. The Relative Strength Index (RSI) and Moving Average Convergence/Divergence (MACD) are both increasing and above their bullish thresholds (black circles). The MACD has also made a bullish cross.

The previous time this happened was in October (white) and led to a 145% ETH price increase. So, the weekly time frame readings give a bullish ETH prediction.

ETH Sentiment on X

ETH sentiment on X is extremely bullish. Benjamin Cowen believes Ethereum has bottomed against Bitcoin and will outperform it in the next few months, noting similarities to the previous market cycle bottoms. He predicts a new all-time high soon. 

Also, while Ethereum’s supply has increased since March, it has had some deflationary periods, the most recent one  starting on Dec. 2. Ethereum ETF inflow  is also positive, with nearly $900 million cumulative total net inflow.

Satoshi Flipper believes that ETH will quickly catch up  to BTC and reach $5,000-$6,000 soon. Raoul Pal shares a similar thought , though he believes the ETH price has to break out from its triangle to confirm this upward movement and reach a new all-time high.

Simon suggests ETH  has already broken out, and the rally has started.

With that in mind, let’s look at the wave count and see where ETH will head next.

ETH All-Time High?

The long-term wave count shows that ETH has traded inside a symmetrical triangle since November 2021. If so, ETH completes wave D in an A-B-C-D-E structure (black). So, a final drop is likely before the price breaks out.

Wave E is often truncated, so ETH does not have to fall to the ascending support trend line to complete the count. The triangle has an initial target of $7,407.

However, if ETH moves above the yearly high of $4,091 (red), it will mean the correction is already over, and ETH will move toward new highs immediately.

The short-term count suggests that a correction could be made. Since September, the price has completed a five-wave increase (yellow). Wave five has developed into an ascending wedge, a sign the increase is ending.

The daily RSI has also generated a bearish divergence (green), implying a correction is due. So, the ETH price may begin a short-term decline before eventually resuming its upward movement and breaking out.

If that happens, the 0.382-0.5 Fibonacci retracement support level at $3,029 – $3,327 will likely provide support and act as the bottom.

Breakout Incoming

Ethereum’s long-term outlook predicts a new all-time high soon. However, the short-term chart is more unclear since it allows for the possibility that a short-term dip will happen before the price resumes its ascent.

A breakout above $4,091 will confirm that the increase toward the high is underway.