Ethereum, a leading digital currency, has seen its price inch upwards since the low observed on December 20th. Despite this, the current rally appears more as a corrective maneuver rather than a definitive upward trend. However, the market’s dynamic nature leaves room for change as developments unfold. Investors and analysts are considering two primary scenarios for Ethereum’s future price movements.
Scenario 1: Corrective Rally (B-Wave Correction)
In the first scenario, we are looking at a broader B-wave correction. The downward trajectory observed from December 6th to December 20th forms what is known as an ABC structure, identified as Wave A. The subsequent upward movement could signify part of Wave B, potentially forming as either an ABC or a WXY structure. The WXY pattern is particularly prevalent in the cryptocurrency market. Should the B-wave reach its peak and break below crucial support levels, a C-wave downturn could commence, indicating the onset of a bearish phase.
Key Resistance and Support Levels
The initial key resistance was identified at the previous swing high of $3550. As Ethereum touches its blue target zone, the upward motion might be technically complete. Nonetheless, this does not conclusively mean a top has formed. For confirmation that the rally has concluded, the price would need to fall below the recent swing low of $3593 and support at $3515.
Scenario 2: Bullish Scenario (New All-Time Highs)
The second scenario offers a more optimistic perspective. It suggests a potential wave two bottom around December 20th, setting the stage for Ethereum to aim for higher prices, potentially reaching new all-time highs. However, the current upward movement lacks the distinct impulsive features typically seen in a third wave as per Elliott Wave theory. For this bullish outlook to gain more credibility, a break above the $3800-$3880 zone would be necessary. Even so, a correction might precede any further upward momentum for Ethereum.
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.
As Ethereum continues its journey through unpredictable market conditions, close attention to these scenarios and key levels is essential for investors seeking to navigate the volatile landscape of cryptocurrency trading. Whether it’s a corrective rally or a path to new highs, the coming weeks will be crucial in determining the direction of Ethereum’s price action.
