Ethereum Price Forecast: Bounce Before Decline
Ethereum (ETH) has been steadily declining, recently falling below the critical $2,000 level, which it had not reached since November 2023. This plunge has sparked fears among ETH holders, particularly since it fell below the November 2024 lows, indicating a possible continuation of the bearish trend.
Market Structure and Price Action: Bearish
Ethereum’s daily chart shows a strong negative market structure. The price has already broken through the 23.6% Fibonacci extension at $1,944 and has already retested it as resistance. This is a clear indication that the sellers remain in charge, as the price was unable to break through the $2,000 psychological barrier.
The On-Balance Volume (OBV) indicator continues to fall, implying that selling pressure is high. The Relative Strength Index (RSI) is also below the neutral 50 level, which reinforces the decline. While the RSI has shown a bullish divergence over the last two weeks, signalling a probable short-term rebound, the overall trend remains bearish.
Potential for a short-term bounce
Despite the ongoing decline, a short-term rebound could be on the cards. If Ethereum’s price recovers, the $2,100 level could become a target. However, this is expected to be a transient move before facing resistance, as the overall market circumstances continue to favour sellers.
The decreasing OBV and Ethereum’s inability to hold above critical resistance levels suggest that a consolidation period has not yet begun. For a true shift in momentum to occur, Ethereum would need to establish a range and have an increase in buying volume, indicating accumulation. Until then, bears are expected to keep control.
Critical Support and Liquidation Levels
Looking ahead, Ethereum’s next key support level is $1,544, which coincides with probable bearish targets in the coming weeks. This level is critical, since any additional slide below it could result in significantly lower price objectives. Furthermore, the 6-month liquidation heatmap shows a dense cluster of liquidation levels around the $1,600 to $1,800 range, which could serve as a strong support zone and possibly pave the ground for a reversal.
To the north, the $2,360 and $2,872 levels are identified as strong resistance zones, but given current market dynamics, these values appear out of reach in the short term unless Ethereum reverses its bearish trend.
1 Week Liquidation Heatmap and Short-Term Range Formation.
The one-week liquidation heatmap provides additional information into the short-term pattern. It implies that Ethereum might create a range of $1,840 to $1,960. This region could prove critical for traders wanting to enter short positions. If the price rallies towards $2,000 but fails to break through, it may indicate a good time to go short, as the downtrend is likely to resume.
Conclusion: When Should You Consider Going Short
While Ethereum may see a slight comeback shortly, overall market fundamentals remain unfavourable. Traders should pay particular attention to the $2,000 resistance level and the $1,544 support. If Ethereum fails to break through $2,000 and shows symptoms of slowing, it may be a good time to take a short position. With the bearish pattern intact and the potential for further drops, Ethereum’s price may continue to fall in the coming weeks.