Ethereum Price Develops an ABCD Correction Pattern: Focus on $2,500

Ethereum's current price action is forming a classic ABCD correction pattern after facing rejection at key resistance levels. As market dynamics evolve, a downside risk looms toward the significant support zone at $2,500.

Key Takeaways

Ethereum is exhibiting a classic ABCD corrective pattern, indicating a potential move towards the $2,500 support area.
The price action shows a rejection from key resistance levels, suggesting a broader market correction rather than a bullish trend.
The Point of Control (POC) and Value Area Low (VAL) are crucial support areas that need to hold to avoid a further downturn.
Market volatility is expected, with significant movements dependent on whether ETH can sustain the $2,500 support level.

Ethereum price forms corrective pattern that target lower support levels.

Ethereum Price Technical Analysis

Ethereum price forms an ABCD correction pattern, putting $2,500 in focus - 1
ETHUSDT (4H) Chart, Source: TradingView

Ethereum’s recent price developments are indicative of a clear corrective environment. After an inability to maintain bullish momentum, ETH sharply rejected from the Value Area High (VAH), which coincided exactly with the 0.618 Fibonacci retracement level. This rejection solidifies the importance of this level as a solid resistance point.

Following this rejection, the price has been moving downward towards the Point of Control (POC) and the Value Area Low (VAL), which is consistent with Market Auction Theory and typical corrective price behavior. Currently, the market is in a defined ABCD correction phase, where the price moves symmetrically from point A to B, retraces to point C, and extends toward point D, completing the structure.

For bullish traders, the focus is on the current support around the POC and VAL. This region signifies short-term equilibrium. A closure below this area would indicate that the market has accepted lower value, raising the likelihood of a move toward the $2,500 region, aligning with the completion of the ABCD pattern. This is happening even as BitMine increases its Ethereum holdings, suggesting a long-term outlook towards an upswing to $20K, which contrasts with the immediate technical risks.

Importantly, corrective patterns like ABCD often facilitate lower-time-frame bounces during their course. However, these price movements should be seen as countertrend unless they are backed by strong trading volume and the reclaim of critical resistance levels. Without this confirmation, any upward moves could remain corrective instead of impulsive.

If Ethereum successfully reaches and holds the $2,500 level, it could lead to the formation of a macro higher low, significantly enhancing the bullish outlook for the asset. This development would pave the way for a resurgence toward the $3,580 key resistance, marking the next major target, particularly as the December 20 options expiry could test Bitcoin and Ethereum's max pain levels, possibly acting as a volatility trigger.

However, until this support level is tested and secured, Ethereum remains entrenched in its corrective phase. The market structure continues to display lower highs, and the price has yet to reclaim important volume levels that would signal a return to bullish dominance.

Future Price Action Expectations

In the near term, Ethereum is likely to experience continued volatility within its corrective framework. If the price drops below the POC and VAL, the move toward $2,500 becomes more probable to fulfill the ABCD correction. A strong response from this level may initiate a shift back toward the $3,580 resistance, while a failure to sustain this support could hinder any significant bullish reversal.