Ethereum’s price has experienced a notable uptick since hitting a low on December 20th. However, the current rally appears more corrective in nature rather than signaling a definitive upward trend. As the market evolves, this perception could change, presenting two main scenarios to consider for future price movements.
Scenario 1: Corrective Rally (B-Wave Correction)
In the first scenario, we consider the possibility of a broader B-wave correction. The downward price movement observed from December 6th to December 20th can be interpreted as forming an ABC structure, referred to as Wave A. The current upward movement might represent Wave B, potentially forming an ABC or WXY structure. WXY formations are particularly prevalent in cryptocurrency markets. If the B-wave reaches its peak and breaks below key support levels, this could trigger a C-wave downwards, indicating the onset of a bearish phase.
Key Resistance and Support Levels
The initial significant resistance level was identified at the previous swing high of $3550. As Ethereum approaches its designated blue target zone, the upward movement may technically be complete. However, this does not necessarily indicate the formation of a peak. For confirmation that the rally has concluded, prices would need to fall below the recent swing low of $3593 and breach the support at $3515.
Scenario 2: Bullish Scenario (New All-Time Highs)
The second scenario offers a more optimistic perspective, suggesting a potential wave two bottom around December 20th. In this scenario, Ethereum could aim for significantly higher prices, potentially reaching new all-time highs. However, the current upward momentum lacks the definitive impulsive characteristics typically associated with a third wave in Elliott Wave theory. A breakthrough above the $3800-$3880 zone could lend credence to this bullish outlook, although a correction may occur before Ethereum continues its ascent.
Key Levels to Watch
- Support Levels: $3593 and the $3515–$3575 range serve as a micro support zone, crucial for maintaining bullish momentum.
- Resistance Levels: The $3808 and $3880 levels are potential resistance zones that Ethereum must overcome to validate further upward movement.
- Trend Confirmation: A break below the established trend channel and the 78.6% Fibonacci retracement level at $2400 would indicate a shift towards a more bearish outlook, warranting caution.
In conclusion, Ethereum’s price path remains uncertain, with both corrective and bullish scenarios possible. Traders and investors should carefully monitor key resistance and support levels to make informed decisions. As the market develops, staying adaptable to new information will be essential for navigating Ethereum’s price movements effectively.
