The Ethereum (ETH) price has been falling since early April, after it deviated above an important long-term resistance level
Although the price has yet to recover above that level, wave analysis and short-term price dynamics indicate that ETH will eventually do so.
ETH price has fallen below resistance level
ETH is a native Ethereum blockchain token co-founded by crypto industry heavyweight Vitalik Buterin.
In the fall of 2022, the entire project migrated from the energy-consuming consensus Proof-of-Work (PoW) mechanism to the algorithm Proof-of-Stake (PoS).
Next, in April 2023, the network successfully passed the update Shapella. The upgrade included EIP-4895, which allowed investors to exit Beacon Chain placed on stacking ETH.
In the course of the upgrade, the offer EIP-4895 was implemented, which allowed investors to withdraw from Beacon Chain placed on stacking ETH.
As the results of technical analysis of the weekly timeframe show, the token shows a generally bearish mood, although there are some contradictory signals mixed in with this picture.
In early April, the price of Ethereum reached the high of this year at $2151, and it seemed that it made a bullish breakout (red circle) above the resistance level of $1950.
In the beginning of April, the price of Ethereum reached the high of this year at $2151.
The following week, however, there was a significant drop, which caused the price of ETH to fall below that level and confirm it as a resistance zone (red icon).
Hence the previous bullish breakout is now considered invalid.
The current downward movement is considered bearish, because the buyers were unable to support the upward momentum. The nearest support area is at $1600.
The weekly Relative Strength Index (RSI), however, remains bullish as it holds above the 50.
It is a momentum indicator indicating overbought/oversold and bullish/bearish market sentiment, depending on whether it is above or below the 50 mark. In the case of ETH, it indicates a bullish trend.
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Will resistance prove to be bullish
In the meantime, a wave analysis of the shorter 6-hour timeframe offers a more bullish picture.
The most likely outcome is that price is now in long-term wave two (white). Therefore, after the completion of the current correction we can expect a significant growth of ETH .
The short-term chart suggests that the price is in a complex W-X-Y correction structure, hence the channel shape.
If this analysis is correct, the price will decline towards the Fibo 0.382-0.5 retracement levels located at $1600 and $1725.. This would also coincide with the support line of the channel.
After that, ETH could launch a significant upward movement, capable of pushing the price to at least $2500.
Despite the bearish short-term outlook, a bullish breakout from the channel would mean that the trend for the currency is bullish and the correction is over.
In that case, the price can move immediately towards $2500.