Ethereum’s price has pushed higher since the low on December 20th, but so far, the rally looks more like a corrective move. Currently, the price action doesn’t seem impulsive enough to confirm a strong upward trend, but this could change as the market develops. There are two main scenarios to consider moving forward.
Scenario 1: Corrective Rally (B-Wave Correction)
The first scenario involves a broader B-wave correction. The downward movement from December 6th to December 20th is seen as an ABC structure (Wave A), and the current move upwards could be part of Wave B, forming either as an ABC or WXY structure. A WXY formation is particularly common in the crypto market. Once the B-wave tops out and a break below key support levels occurs, a C-wave down could begin, signaling the start of a bearish phase.
Key Resistance and Support Levels
The initial key resistance was marked by the previous swing high at $3550. With Ethereum reaching its blue target zone, the move up may be technically complete. However, this doesn’t necessarily mean a top has formed yet. The price would need to break below the most recent swing low at $3593 and support at $3515 for further confirmation that the rally has ended.
Scenario 2: Bullish Scenario (New All-Time Highs)
The second scenario presents a more bullish outlook. This involves a potential wave two bottom around December 20th, with Ethereum aiming for higher prices, possibly reaching new all-time highs. However, the current upward move lacks the clear impulsive characteristics typical of a third wave in Elliott Wave theory. A break above the $3800-$3880 zone could provide more evidence for this bullish outlook, but a correction could follow before Ethereum pushes higher.
Key Levels to Watch
- Support Levels: $3593 and $3515–$3575 (Micro Support Zone).
- Resistance Levels: $3808 and $3880 (Potential Resistance Zone).
- Trend Confirmation: A break below the trend channel and the 78.6% Fibonacci retracement level at $2400 would signal a shift to a more bearish outlook.
