After facing rejection for several weeks and experiencing a series of downward trends, the price of Ethereum has reached a critical point near a significant support area. Despite the dominant bearish trend, this recovery could also indicate the possibility of a temporary consolidation phase.
The price of ETH has been in a long-term downtrend, breaking multiple support levels including the 100 and 200-day moving averages. As a result, Ethereum reached its lowest level in several months at $1,531. However, at this point, the Ethereum price encountered a critical support zone that covers the range between 50% and 61.8% Fibonacci retracement levels.
Nevertheless, market participants view this range as the defense of Ethereum bulls. A drop below this threshold could increase the likelihood of a significant decline. In addition to bearish signals, the 100-day moving average crossing below the 200-day moving average created a strong bearish signal known as the death cross.
However, despite these bearish indicators, there is still hope that the price can find support and enter a consolidation phase around the 200-day and 100-day moving averages. When considering the 4-hour timeframe, it can be observed that Ethereum went through a consolidation phase in the price range of $1.6k to $1.8k. During this period, a bear flag pattern indicating a downward trend formed, and eventually, the price broke below the lower trend line of the flag, triggering a significant downward movement.
However, as Ethereum approached the critical support level of $1.5k, buying pressure intensified and led to a recovery. This caused a pullback towards the broken lower threshold of the flag and potentially formed a retracement. If this retracement occurs successfully, it could indicate the beginning of another downward phase aiming to break below the $1.5k level.
On the other hand, if the price fails to complete the pullback and surpasses the trend line, market participants may anticipate an upward movement towards the resistance level of $1.7k. Therefore, closely monitoring these significant support and resistance levels around the upcoming price movement could be crucial in determining Ethereum’s medium-term trajectory.