Ethereum’s price has been on the rise since hitting a low on December 20th, but the current rally appears to be more of a corrective move rather than a strong upward trend. As the market continues to evolve, the price action could potentially shift in either direction. There are two main scenarios to consider as Ethereum’s price trajectory unfolds.
Scenario 1: Corrective Rally (B-Wave Correction)
In this scenario, the current upward movement could be part of a broader B-wave correction following the ABC structure of a previous downward movement from December 6th to December 20th (Wave A). The ongoing rally may form either an ABC or WXY structure, with a WXY formation being a common occurrence in the crypto market. Once the B-wave reaches its peak and breaks below key support levels, a C-wave down could signal the beginning of a bearish phase.
Key Resistance and Support Levels
The initial key resistance level was set at the previous swing high of $3550. While Ethereum has reached its target zone, the rally may not have peaked yet. Confirmation of a top would require a break below the recent swing low at $3593 and support at $3515.
Scenario 2: Bullish Scenario (New All-Time Highs)
Alternatively, Ethereum could be gearing up for higher prices, potentially reaching new all-time highs after a potential wave two bottom around December 20th. However, the current upward momentum lacks the clear impulsive characteristics typically seen in a third wave according to Elliott Wave theory. A decisive break above the $3800-$3880 zone could provide more evidence for a bullish outlook, although a correction may precede further upside movement.
Key Levels to Watch
Support Levels: $3593 and $3515-$3575 (Micro Support Zone).
Resistance Levels: $3808 and $3880 (Potential Resistance Zone).
Trend Confirmation: A shift to a more bearish outlook would be signaled by a break below the trend channel and the 78.6% Fibonacci retracement level at $2400.
As the market continues to evolve, staying informed and up to date on the latest trends and developments in the cryptocurrency world is essential. By keeping a close eye on key support and resistance levels, as well as potential trend reversals, investors can make informed decisions about their Ethereum holdings.