Ethereum has bounced back over 60 percent in two months. It’s not as spectacular as it seems. ETH is currently trading at $2,337.52 at the time of writing in a tight range between a solid demand zone around $1,600-$1,750 and a solid supply zone around $2,800-$3,100. The price is more or less in the middle of that range and has been trading in it since late March. So far, the situation is not really a recovery but a consolidation.
The structure: two zones defining everything
The daily chart illustrates price action quite clearly. Following the significant sell-off in February that briefly hit $1750, buyers rushed back in and ETH hasn’t been back to that price level since. That green area between $1580 and $1750 has stood firm in all tests and is the most significant area of structural support on the chart.
Above that price lies a massive red supply range from $2,800 to $3,100. That range represents the zone from which ETH broke down on early February and it hasn’t touched that range ever since. For the real trend to shift to bullish, it is a requirement for ETH to take back the $3,000 level and hold above it; bulls remain within a ceiling range.
The current price of $2,337.52 sits below a horizontal resistance line near $2,400, which has acted as a near-term cap across multiple sessions in April and May. That level is the first gate. The $3,000 zone is the second.
What the indicators are saying
The moving average picture also depicts the phase of compression. The 7 day SMA is located at $2,336.03 and the 30 day SMA at $2,321.97, both close to each other and very close to the spot price. This often indicates a flat market rather than a market tending in either direction. Both short-term averages are well below the 200 day SMA and 200 day EMA at $2,662.84 and $2,540.72 respectively, ETH is clearly in a technically bearish long-term trend.
MACD provides slightly bearish signals on the daily bars, with MACD at 22.58 against the signal line at 25.25 and a histogram of -2.67. Histogram is not notably negative but confirms the loss of some momentum since the last highs.
Moving over to the RSI side. 14 period RSI at 57.67, and 21 period RSI at 55.90 are both above 50, and are well away from being overbought. Price can move up still until RSI is seen as a resistance level. A 7-period RSI at 62.86, still implies the shorter-term trend is positive.
Combining these two readings presents a picture of a market that is generally trending positive over the medium-term, although the very near-term rally appears to have taken a pause, which is to be expected after a few weeks of gains.
Fibonacci levels frame the near-term battle
The key Fibs drawn from the swing high, $2464.78 down to the swing low $2176.32 are relevant here. The 38.2 percent retracement of $2354.59 is roughly where the current price is trading right now. The 50 percent retracement is $2320.55 which should be the level the bulls need to protect on any further pullback.
The 61.8 retracement at $2286.52 and 78.6 level at $2238.05 below $2320 can come into play. Yellow horizontal in the chart around $2273 corresponds to this group and seems like the most immediate support level.
From the upside, there was the prior session pivot at $2,354.48 as the first reference point. Above this, there is a 23.6 percent retracement at $2,396.71 just below the $2,400 resistance level. If the bulls can hold a break of $2,400 we will then see some Fibonacci extension targets of $2,543 (127.2 percent) and eventually $2,643 (161.8 percent); however, both are still well off from overhead supply.
The technical side
For a short-term trader, this range is well defined. Support sits at the $2,273-$2,320 region in the near term. Staying above this region makes the consolidation constructive. Breaking the $2,200 would be a structural level and a deeper retracement lower would likely follow.
The short-term trigger point for going on the buy side is at $2,400. A clear and strong daily close above $2,400 will change short-term sentiment and open the doors to $2,543; however, $3,000 (the ceiling of the overhead supply area) is where the medium-term bull needs to see to continue the rally beyond consolidation.
If one is looking for the positioning for a longer-term time horizon, the demand region between $1,600 and $1,750 still constitutes the underlying floor. Provided that the asset is still holding that, our risk/reward at the current price is based on a definite area. The question is the ceiling. With a $700 range ($2,300-$3,000), where price discovery will resolve itself, there is a substantial amount of ambiguity.