Are We Facing More Declines, or Is This a False Alarm?

Ethereum has recently encountered rejection at a crucial confluence zone, notably the 0.618 Fibonacci level. With the price retreating below the point of control, traders are on high alert for signs of a possible deeper move or a mere setup for a false breakout.

The price action of Ethereum (ETH) has hit a pause at a key technical area, specifically the 0.618 Fibonacci retracement level measured from the most recent pivot high to low. This zone is reinforced by daily horizontal resistance as well as a descending VWAP, enhancing its significance as a critical decision point. Following several unsuccessful efforts to climb, ETH has fallen back, currently trading beneath the local range’s point of control (POC).

Key Technical Insights

• Notable Resistance Cluster: The 0.618 Fibonacci level coincides with daily resistance and a descending VWAP, creating a potent technical ceiling.
• POC Decline: The price has moved below the volume point of control, signaling that sellers are gaining strength in the short-term market.
• Emerging Bearish Structure: Lower highs coupled with a stalled breakout heighten the probability of a move towards the next critical support level around $1,540.

Detailed Analysis

After a significant upward movement, Ethereum’s price has been consolidating below a major resistance area. The 0.618 Fibonacci level, a vital retracement reference, is additionally supported by daily horizontal resistance and a declining VWAP from the previous major high. This convergence has triggered notable selling pressure, resulting in multiple unsuccessful breakout attempts.

The growing caution surrounding the current market setup is amplified by the recent loss of the point of control in this area. The price has retracted below the highest volume node of the recent range, indicating the market’s rejection of value at these levels. This often suggests a potential range rotation or continuation in the direction of the rejection, indicating a downward trajectory in this case.

The technical framework also reveals a clear short-term bearish formation. ETH has struggled to produce higher highs or maintain higher lows, increasing the likelihood of a broader correction. The next logical support level appears around $1,540, representing not just a structural level from previous sessions but also a zone characterized by identified price inefficiencies (e.g., unfilled fair value gaps) that could attract price action.

This scenario suggests a possible 10% decline from current price levels, particularly if the recent swing low fails to hold. However, traders should remain vigilant for the potential of a false breakout, as Ethereum has previously demonstrated abrupt strength from similar rejection levels.

Outlook: Anticipated Price Action

Ethereum’s inability to breach the 0.618 confluence zone and its rejection from the POC point toward a greater chance of rotation towards lower support levels. A drop below the recent swing low could set the $1,540 region as the next target.

On the other hand, if buyers can uphold the current levels and reclaim the POC, this may signal a local false breakout prior to resuming an upward trend. For now, it is advisable to exercise caution as the price hovers near a pivotal level.