Is Further Downside Ahead, or Is This Just a False Alarm?

Ethereum has recently encountered resistance at a pivotal confluence area, notably the 0.618 Fibonacci level. With the price falling back below the point of control, traders are on alert for signs of a deeper decline or a potential trap.

The price action of Ethereum (ETH) has reached a standstill at a significant technical area, specifically the 0.618 Fibonacci retracement level established from the most recent pivot high to low. This region is reinforced by daily horizontal resistance and a descending VWAP, making it a critical decision zone. After several failed attempts to break higher, ETH has rolled back, trading below the local range’s point of control (POC).

Key Technical Insights

• Major Resistance Area: The 0.618 Fibonacci level coincides with daily resistance and a descending VWAP, forming a significant technical barrier.
• Loss of POC: The price has fallen beneath the volume point of control, suggesting that sellers are gaining traction in the short-term market.
• Emerging Bearish Structure: The formation of lower highs, paired with a stalled breakout, raises the probability of a move towards crucial support around $1,540.

Comprehensive Analysis

After a notable upward movement, Ethereum’s price has been consolidating beneath a key resistance area for several sessions. The 0.618 Fibonacci level serves as a crucial retracement marker and is further supported by daily horizontal resistance and a declining VWAP from the previous major high. This confluence has generated significant selling pressure, resulting in multiple failures to breach it.

Exacerbating worries around the current setup is the recent loss of the point of control in this area. The price has dipped below the highest volume node of the recent range, indicating that the market is not accepting values at these levels. This often signifies a potential range rotation or a continuation in the direction of the rejection, which, in this case, points downwards.

The technical landscape also reveals a developing short-term bearish structure. ETH has struggled to produce higher highs or maintain higher lows, increasing the likelihood of a broader correction. The next key support level is estimated around $1,540, representing a structural level from earlier sessions and a zone with identifiable price inefficiencies (e.g., unfilled fair value gaps) that could attract price action.

This situation creates the potential for a downside of approximately 10% from current price levels, especially if the recent swing low fails to hold. Nevertheless, traders should remain vigilant for a potential fakeout, as Ethereum has previously shown sudden strength from similar rejection areas.

Future Outlook: Anticipated Price Action

The inability of Ethereum to exceed the 0.618 confluence zone and its rejection from the POC suggest an increased chance of rotation toward lower support levels. A break below the recent swing low could position the $1,540 region as the next target.

On the other hand, if buyers manage to defend the current levels and reclaim the POC, it could signal a local fakeout before resuming an upward trend. For now, it is wise to exercise caution as the price remains close to a critical threshold.