Ethereum currently trades at a key resistance zone. An emerging harmonic pattern may indicate that a pullback is likely to be deeper before a bullish trend continues.
Ethereum’s (ETHThis price movement has now reached a critical point. The asset trades at the high timeframe resistance level of 2,590. The zone in question is of great importance from a technical perspective, since it corresponds to the Fibonacci level of 0.618 retracement as well as the midpoint on the Fibonacci price channel. Although the bullish trend is still intact, this area could be a short term ceiling. It may trigger a move to correct that will set up a breakout.
Three important technical points
- Ethereum’s resistance is at $2,590. This zone coincides with 0.618 Fibonacci and channel middlepoint.
- The formation of a butterfly-like pattern is likely. A corrective leg (C) must be completed before the continuation of a bullish legs D.
- A healthy pullback could target the high timeframe support of $2,226 to finish leg C.
Ethereum recently gained momentum and climbed into the $2.590 area, which is marked by a strong resistance in history, as well as multiple technical layers. The level of $2,590 is not just a round number for psychological reasons but it also corresponds to the Fibonacci Retracement of 0.618 from the highest point in the past up until the latest swing low ($1,920). This area also coincides with the middle of the larger Fibonacci price channel within which Ethereum is trading.
It is possible that Ethereum will temporarily stagnate at this point before it resumes its upward movement. Note that a possible Butterfly harmonic pattern appears within the current structure. The setup must remain valid if a C-corrective leg forms, which implies that a possible retracement could be towards $2,226, where channel and high time frame support are converging.
If the price returns to this level it will confirm the formation and continuation of Leg C. It is also a strong resistance area on the high timeframe.
This scenario will only be validated if volume and structure are both present. Volume is currently muted. This indicates that a breakout above this level of resistance would need a significant surge in buyers’ interest.
Price action to come
Ethereum continues to be bullish at higher timeframes. However, a pullback of $2,590 is both technical and expected. The harmonic structure could be completed by a move towards $2,226. This would pave the way to a further rise toward $3,200 if support is maintained and the volume increases on the subsequent leg up.
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Source: crypto.news
