Ethereum’s (ETH) Make-Or-Break Moment: Yearly Low Threat vs. Bullish Reversal Setup

Key Takeaways

• Ethereum (ETH) broke down from an ascending parallel channel.
• The ETH price trades incrementally above its yearly low of $1,759.
• Will ETH fall below this level, and what’s the next support if yes?
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Ethereum’s price has fallen over 45% to start the year, creating a new yearly low of $1,759. A rally began on March 11, briefly taking Ethereum above $2,000. The rally was unsuccessful, and the price nearly reached a new yearly low after breaking down.

Despite the negative price action, there is positive Ethereum news. Petra, the upcoming major Ethereum upgrade, was successfully deployed on the Hoodi testnet and is now set for launch on April 30.

With that in mind, let’s analyze the Ethereum price action and see if the anticipation surrounding Petra can trigger an April rally.

Ethereum Price Breaks Down

After an 85-day downward trend, Ethereum bounced on March 11 and rallied for 13 days, reaching a high of $2,104.

While the rally was significant, it was contained inside an ascending parallel channel, raising doubts that it was corrective.

The breakdown was confirmed on March 28, when the ETH price fell below the channel, plunging to a low of $1,769, only $10 above the yearly low of $1,759.

While in corrective downward movements, the price often bounces at the 0.618 Fibonacci retracement support level, Ethereum did not do that but retraced all of its previous upward movement.

The lack of a bounce reinforces the hypothesis that Ethereum’s trend is bearish and new lows will occur.

Despite being in oversold territory, the Relative Strength Index (RSI) is also falling and has not generated bullish divergences.

So, the ETH trend is bearish, supporting the continuation of the downward movement. If ETH falls below its yearly low, the next support will be $1,547, created by the 1.61 external Fibonacci retracement support level.

Can Ethereum Bounce?

The two-hour chart reiterates that Ethereum is in a bearish trend. It shows a five-wave downward movement since the March 23 high (red). The sub-wave count (black) shows that wave three is extended.

If the count is accurate, Ethereum is in the fifth and final wave of the decrease, possibly developing into an ending diagonal.

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The wave count suggests Ethereum will complete its five-wave downward movement soon and bounce, reaching the 0.382-0.5 Fibonacci retracement resistance area at $1,900-$1,938.

Short-term indicators support this possibility. The RSI and Moving Average Convergence/Divergence (MACD) generated bullish divergences (orange).

Combined with the descending wedge, they suggest an Ethereum price breakout and a rally is incoming.

Nevertheless, the long-term ETH trend is bearish, and another breakdown is likely. The proposed breakout could be a relief rally before the ETH price falls to a new yearly low.

New Yearly Low Inevitable

Ethereum’s price showed promise in March by rallying for 14 days, but it failed to sustain its momentum until the end of the month. On the contrary, ETH plunged last week , nearly falling to a new yearly low.

While the short-term outlook suggests a bounce is possible, the long-term Ethereum prediction remains bearish, with another breakdown expected soon.