Ethereum Price Mirrors May 2021 Movement After 30% Correction – Will History Repeat for ETH?
Will Ethereum Price Movement Mirror That of 2021? | Credit: Getty Images
Key Takeaways
- Ethereum’s price has fallen 30% since reaching a yearly high in March.
- The RSI and MACD readings are eerily similar to those in May 2021.
- Can the Ethereum price undergo a similar upward movement this month?
The Ethereum price bounced after reaching a low of $2,824 on May 1. The bounce validated a Fibonacci, horizontal, and diagonal support area. The correction ongoing since March shares similarities to that in May 2021.
Although the price movement differs from May 2021, the wave count and indicator readings imply the possibility of ETH initiating a comparable uptrend in the next few weeks.
Similarities to Previous Ethereum Movement
The ETH price has fallen since reaching a yearly high of $4,095 in March. The decrease culminated with a low of $2,815 on May 1. This was a drop of 30% from the aforementioned high.
The decrease also validated the $4,000 area as resistance. This is the final resistance area before the all-time high price of $4,868. The price now trades just above the 0.382 Fibonacci retracement support level at $2,870.
The MACD and RSI both give interesting readings which mirror those in 2021. More specifically, the RSI has fallen the 50 level (red circle) while the MACD has made a bearish cross (red icon).
The exact same readings were seen in May 2021. At the time, ETH consolidated for nearly 60 more days before gradually increasing toward the all-time high price.
However, the price action now and in May 2021 is nothing alike. While the ETH price currently trades well below its all-time high, the opposite was true in May 2021. In fact, ETH reached a new all-time high in January and was roughly 50% above it in May.
As for the wave count, the price was likely in wave four of a five-wave upward trend.
ETH Price Prediction: When Will the Correction End?
While the price action is not similar, the wave count is. Even though the degree is different, the ETH price is likely in wave four of a five-wave upward movement (white) which started in November 2022.
Besides the Fibonacci support level, ETH trades inside a horizontal and diagonal support level, created by an ascending support trend line and a horizontal support area. A breakout from the short-term resistance trend line will confirm wave five has started.
If the count is accurate, ETH can increase to the next target between $4,700 and $4,800. The target is found by the 1.61 external Fibonacci retracement of wave four (black) and by giving wave five 0.618 times the length of waves one and three combined.
Finally, the short-term six-hour chart aligns with the possibility of a bounce. The chart shows that created a double bottom pattern, combined with bullish divergences in both the RSI and MACD. On top of being a bullish pattern, the bullish divergences align with the likelihood of a bounce.
As a result, conditions are ripe for the resumption of the Ethereum upward movement. This will be rendered invalid if ETH breaks down from the previously outlined ascending support trend line. Then, the ETH price can drop to $2,300.
Ethereum’s Positive May Outlook
To conclude, the weekly RSI and MACD readings for Ethereum are very similar to those in May 2021, before ETH increase toward its all-time high. While the price action is dissimilar, the wave count also notes a resemblance. Additionally, the short-term price action has created a bullish pattern that can lead to significant bounce. All signs point to Ethereum enjoying a bullish May.
