Ethereum Shows Signs of Recovery: Key Levels for Traders to Watch

Ethereum recently fell to $2,156 amidst a generally bearish market sentiment, but higher timeframe charts indicate a possible buying opportunity. While the long-term outlook remains positive, short-term movements suggest cautious trading. This article explores the current price action, institutional buying trends, and what traders should consider.

Key Takeaways

Ethereum dipped to $2,156 but shows signs of potential recovery.
Despite bearish short-term momentum, higher timeframe charts suggest a buying opportunity.
Institutions like Bitmine continue to invest in Ethereum, indicating confidence in its future.
Traders are advised to be cautious and wait for clear signals before making short-term moves.

Ethereum could bounce toward $2,800- Should you buy, or wait to sell?

Current Ethereum Price Movement

Ethereum 4-hour Chart
Source: ETH/USDT on TradingView

Ethereum experienced a drop to $2,156 on February 2, marking a significant bearish trend. Despite this, long-term charts indicate there might be a good buying entry point, supported by a weekly bullish swing structure from the mid-2025 rally.

Recent trading saw Ethereum approaching the 78.6% retracement level at $2,147, suggesting that bullish momentum could still be present despite the recent dip. Notably, large institutions such as Bitmine are actively purchasing Ethereum. Currently, Bitmine faces a substantial unrealized loss of $6.38 billion, translating to a 38.91% decline in its investments. Just last week, they acquired an additional 40,000 ETH, valued at approximately $90 million, showcasing their strategy to "buy the dip" even in challenging market conditions, per Tom Lee's comments.

Analyzing Short-term ETH Price Action

As the long-term indicators suggest optimism, the short-term outlook remains negative for swing traders. A possible upward bounce to $2,700 provides a selling opportunity for traders. This bounce is anticipated due to the H4 RSI showing a bullish divergence within oversold levels. This divergence has already led to a 6.58% price increase, rising to $2,395 within 12 hours.

Speculation indicates that the bounce could push prices toward $2,600 in the upcoming days.

Traders’ Recommendations – Exercise Caution!

While a price bounce seems plausible, it's essential to approach with caution. Scalp traders should utilize the H4 structure for insights on potential buying opportunities. For the broader trading community, Ethereum currently does not present an ideal scenario for shorting, nor is there clear momentum for a significant bounce.

Ethereum Liquidation Heatmap
Source: CoinGlass

According to the Liquidation Heatmap, a movement above $2,400 could trigger profit-taking activities among short sellers. Following this, a liquidity sweep at $2,450 might lead to a price drop. However, scenarios pointing towards a bounce between $2,700 and $2,800 remain plausible, as this region serves as both a liquidity cluster and a significant Fibonacci retracement point. Traders might want to wait a few days for Ethereum’s direction to become clearer before taking any positions to short.

A breakthrough beyond the local high of $3,041 could shift the H4 bias positively.

Conclusion

Disclaimer: The information shared in this article does not constitute financial, investment, trading, or other forms of advice and is solely the author's perspective.