Ethereum’s Price Action: Can the Falling Wedge Lead to a Major Rally?
- Ethereum’s price holds strong above $3,140, eyeing a breakout above $3,250 resistance.
- RSI bullish divergence hints at upward momentum, despite ongoing market volatility.
- Ethereum’s options volume surges 8.88%, signaling rising expectations for price action.
Ethereum has sparked significant interest in crypto as it is setting up for a potential breakout from its current falling wedge pattern. Ethereum trades at $3,144 at press time, reflecting a 2.21% increase in the last 24 hours.
However, the big question remains—will Ethereum break out or continue to face further resistance? Let’s dive into Ethereum’s price action and explore the key levels traders should watch.
Price Action Analysis: What’s Happening in the Market?
Ethereum’s chart reveals a classic falling wedge formation, which has historically been a bullish pattern. A falling wedge is characterized by two converging trendlines: the upper trendline acts as resistance and slopes downward, while the lower trendline serves as support and slopes upward.
As the price moves within the wedge, the market tightens, and volatility reduces. The pattern generally signals that the price could experience a breakout to the upside once it surpasses the upper resistance level.
Source: X
Currently, Ethereum is testing the lower boundary of the falling wedge near $3,140, which has acted as strong support. The price has held above this level for several days, indicating that bulls are still active in the market.
On the upside, it has faced resistance around $3,250, failing to break through this level on multiple occasions. These resistance zones will be crucial for determining the next move, as a breakthrough above $3,250 could lead to a rally toward $3,350 or even higher.
Technical Indicators: Are RSI and MACD Aligning for a Bullish Move?
The technical indicators add more weight to the bullish narrative. The Relative Strength Index (RSI) shows a potential bullish divergence, where the price forms lower lows, but the RSI is making higher lows. This divergence is a strong signal that momentum is shifting in favor of the bulls despite the price decline.
In addition, the MACD indicator has shown narrowing histogram bars, which could indicate that the bearish momentum is weakening, further supporting the possibility of a reversal.
Source: TradingView
However, with the Federal Open Market Committee (FOMC) meeting coming up, it’s price could be influenced by broader market volatility. This makes it crucial for traders to monitor how the market reacts to potential economic news, as sudden shifts could impact the validity of these bullish signals.
Ethereum’s Liquidation Data: A Telltale of Market Sentiment
The recent Ethereum liquidation data adds another layer of insight into the market’s sentiment. It’s volume has increased by 23.90%, and open interest has risen by 2.91%, indicating that traders are positioning themselves for a major move.
Furthermore, options volume has risen by 8.88%, suggesting heightened expectations for significant price action. The longs continue to outnumber shorts, confirming that the market sentiment leans toward a bullish breakout, at least in the short term.
Source: Coinglass
Conclusion: What’s Next for Ethereum?
Ethereum’s price action signals a potential breakout from its falling wedge pattern, supported by bullish divergence in the RSI. However, the upcoming FOMC meeting introduces uncertainty, and market volatility could impact the price. Ethereum must surpass the $3,250 resistance level to confirm the breakout. A successful breakout could target higher levels, but failure to break the resistance may lead to consolidation. Traders should closely watch these key levels for the next major move.