Prepare for Change: Ethereum Price Shows Signs of a Counter-Trend Correction

Summary: Ethereum is currently trading slightly above the critical $2,000 psychological level, but this perceived stabilization might not be what it seems. A technical analysis from crypto analyst RLinda suggests that the current upward movement may just represent a counter-trend correction—a temporary bounce in a bear market that could lead to further declines.

Key Takeaways

Ethereum is trading just above $2,000, but this stabilization may be temporary.
The cryptocurrency market is still in a bearish phase, with Ethereum showing lower highs and lows.
Price resistance is significant between $2,024 and $2,062, where a potential decline could be confirmed.
Current trading indicates Ethereum around $2,050, with a possibility of dipping further to around $1,900.

Ethereum Trading

Understanding the Current Market Condition

RLinda begins with a clear observation that the ongoing crypto winter is far from over, with the potential for support to break around the $2,000 mark. The technical analysis, based on a 2-hour timeframe chart, shows that Ethereum has been creating a series of lower highs and lower lows since facing rejection in mid-March at around $2,380. Over the weekend, Ethereum's price dipped to the $1,960-$1,990 range, indicating that sellers are still actively trying to regain control of the market, which RLinda categorizes as a counter-trend correction.

This correction often creates the false impression of recovery. The price may trend upward or remain stable, all while being within a larger bearish framework. The charts make this trend evident, as Ethereum attempts a modest rebound after establishing a temporary low just below the $2,000 mark over the weekend.

Ethereum Analysis
Source: Chart from RLinda on TradingView

Compounding the situation is the overall market environment surrounding Bitcoin. Last week, Bitcoin was seemingly attempting a recovery toward $72,000 but has since reversed direction, dropping to as low as $65,810 over the weekend. With bears reestablishing control, Bitcoin's decline has a cascading effect on altcoins, possibly leading Ethereum to experience significant downward pressure in the days ahead.

Key Price Levels to Monitor

On the 2-hour chart, the immediate attention is drawn to a cluster of resistance between $2,024 and $2,062. This specific range aligns with multiple technical indicators shown on the chart, including previous support that has now converted to resistance, Fibonacci retracement levels around 0.5 and 0.618, and a descending trendline constraining the lower highs observed in March.

According to RLinda's analysis, Ethereum might test liquidity zones between $2,025 and $2,038. A short squeeze in this area could signal a potential decline. Critical resistance levels to keep an eye on include $2,025, $2,037, and $2,062. The notable point of interest (POI) at $2,062.50, highlighted in the chart above, is deemed to be crucial.

If Ethereum revisits this resistance area, followed by a false breakout and subsequent consolidation in the short term, it will confirm the dominance of bearish trends. If confirmed, this could result in a counter-trend correction leading to increased selling pressure that drives Ethereum's price toward a support level around $1,900. As of now, Ethereum is trading at approximately $2,050.

Ethereum Trading Chart
ETH trading at $2,053 on the 1D chart | Source: ETHUSDT on TradingView.com