Ethereum (ETH) is hovering around 2,120 USD after breaking below the lower support of the ascending parallel channel and slipping past the Fibonacci retracement level of 0.236 at 2,140 USD last week. This has left both the bulls and bears hesitant about the next direction.
The Bollinger Band Width Percentile is at its lowest level in months, signaling that volatility is likely to expand soon, while traders are watching to see if the demand zone near 1,950 USD can hold before ETH chooses its direction.
The 4-hour chart shows that the bears have been dominating the market continuously.
ETH has been moving within a descending parallel channel on the 4-hour timeframe since April 26, and currently, ETH is trading at 2,122 USD and is testing the midline of the channel from below.
If the price breaks above the midline, it could pave the way to reach 2,230 USD, which is the upper boundary of the channel and aligns with the daily resistance that short traders are keeping an eye on.
However, trading volume continues to contract during the price attempts to push up, while the Relative Strength Index is moving near the 55 level, which is considered neutral and reflects the previous failed rebound within this channel.
As long as trading volume doesn't return, the price structure will continue to favor the sellers. If ETH closes below 2,080 USD, it will pull the price back to the lower range of the channel and revert to a downtrend.
The demand zone could act as a catalyst for a bounce back to 2,400 USD.
However, not all signals point to a downtrend, as one analyst noted that ETH is defending the daily demand zone between 1,942 and 2,015 USD and is preparing for a rebound.
ETH is still holding above the daily demand zone between 2,000-1,900 USD and is attempting to bounce back. As long as this zone holds, we expect to see a rebound from here to 2,400 USD or higher. This outlook remains as long as ETH doesn't break below this demand zone. Written by Crypto Candy
This thesis relies on buyers stepping in during the green candles and refusing to let the price close below 1,942 USD. If there's confirmation of rejection from this price range, it will reflect the previous rebound that targeted 2,463 USD.
Such movement would also force a daily close back into the uptrend channel that just broke down last week. However, if this zone cannot be defended, it would indicate the uptrend model has ended.
Ethereum price forecasts point to 2,382 USD or a drop to 1,920 USD.
The daily chart connects both signals together. Ethereum has fallen below the lower edge of the parallel uptrend channel that's been in place since February 7. At the same time, the price has dropped below the 0.236 Fibonacci retracement level at 2,140 USD.
The Bollinger Band Width Percentile shows a significant contraction, as such narrowing typically precedes rapid expansion, whether up or down, and this occurs no more frequently than every two weeks.
If the price can reclaim the uptrend channel, it will open the path to the 0.382 Fibonacci level at 2,382 USD, which is the next key resistance. After that, the golden ratio will be at 2,772 USD.
If the 1,950 USD level cannot be defended, the price will be pushed down to 1,920 USD, which is a horizontal support level identified by traders. If it weakens further, there’s a chance the price could drop to the February lows around 1,750 USD.
The Relative Strength Index is moving up from the bearish zone but is still close to the 40 level, which confirms that the momentum direction has not yet flipped to the buyers' side and aligns with the downtrend previously forecasted for this quarter.
The next two weeks will be crucial in determining which side wins. Whichever party breaks through the volatility first will dictate ETH's price direction heading into Q3.