Among the many mainstream cryptocurrencies we closely follow, Ethereum's performance is particularly noteworthy. Unlike other Altcoin, Ethereum has not shown an obvious bottom divergence pattern on the daily or weekly charts, and its performance continues to show weakness. This time, we will analyze Ethereum in depth from a more macro weekly level, explore its key support and resistance levels, possible future trends, and the risks and opportunities hidden in it.
First, let's analyze this chart of Ethereum's price action, which shows a super-large price channel. This channel not only determines key resistance and support levels, but also covers the entire cycle from the bull market high in 2017 to the bear market low in 2019. According to channel theory, once this pattern can accurately capture the historical bull-bear conversion, it can also predict future market movements.
For a deeper analysis, we move this channel upward to point A, which is the apex on May 10, 2021, the famous "519" event. On this day, the price of Ethereum plummeted from 4,300 points to 1,700 points, causing many investors' contract positions to suffer heavy losses. In the subsequent decline, the price crossed two channels and formed a Double Botto structure at the lowest point. Although Ethereum later rebounded as Bitcoin hit a new high, this marked the end of the bull market.
We again align the highs in the chart to the historical high at point C and observe that the price then fell to point D, where it also experienced a two-channel decline and formed a Double Botto structure at point D, after which the price rebounded to point E. Point E represents the high point of this rebound.
The price then fell again. In this round of decline, we took point E as the new benchmark, and the price finally stabilized at point F. The distance between point F and point E was exactly the span of the two price channels. After a long period of consolidation at point F, the market finally ended the bear market in December 2023, and then rebounded from the lowest point of 800 points in June 2022 to 2200 points in 2024, ushering in a new bull market cycle.
According to the same analysis method, we adjust the price channel to the new wave starting point X. From point X to point Y, which is the highest point of $4,200 reached in March, we find that the increase from X to Y also covers two price channels. After completing this fluctuation, the market entered a new round of consolidation.
Currently, a notable pattern facing Ethereum is that each decline usually crosses two channels, while each consolidation is completed within a channel. Whether it is at point A, point C, point E, or the latest point X and Y, this pattern is reflected: the decline of two channels is usually followed by a consolidation period of one channel.
Currently, the price of Ethereum faces a key resistance point, which is the lower limit of the channel at $2,800. On August 5, the price of Ethereum fell below this support level, indicating a potential high-risk area. In particular, Justin Sun bought a large amount of Ethereum in the range of $3,500 to $3,000, resulting in a cumulative loss of nearly $200 million. Ethereum is currently at a critical position of $2,800; if it can break through this point, Ethereum may resume its previous upward trend; if not, the market will face more difficulties in the future.
From a technical analysis perspective, Ethereum's weekly chart shows that both the 5-week and 10-week moving averages have crossed below the 30-week moving average, marking the weakness of the market and a possible reversal of the trend, entering a typical downward trend. However, in October 2023, Ethereum successfully broke through the 30-day moving average, and the 5-week and 10-week moving averages diverged upward, forming a bullish trend. It is currently back to a downward trend, showing the formation of a bearish trend.
Ethereum is currently at a decisive position. If it can break through and stabilize above $2,800 and form an upward turn of the 5-week, 10-week and 30-week moving averages, then there may be a period of positive market performance. In contrast, Bitcoin also faces an important resistance level and is under strong pressure at $62,000. Only by breaking through this level can new market challenges and highs be opened, leading the entire cryptocurrency market out of the downturn.
In terms of operation strategy, we must be cautious and avoid excessive investment positions while maintaining market participation. In the short term, if there is a bottom divergence at the 2-day, 3-day, and 5-day level, it may be a signal to enter the market. In addition, considering the possible interest rate cut in September, the market may usher in a wave of speculation. However, during the market rebound, we need to find the right time to exit. We will provide detailed guidance to investors in the VIP group on specific exit strategies.
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