Ethereum appears poised for a significant breakout above the highly anticipated $4,000 price threshold. Despite this potential, the cryptocurrency has recently fallen short of the expectations of many enthusiasts and retail traders. The much-hyped launch of Spot Ethereum ETFs, rather than sparking a rally, turned into a classic “sell-the-news” event, leading to disappointment in the market.
However, according to a crypto analyst, the overall sentiment around Ethereum remains fundamentally positive. This optimism is largely held up by some bullish investors who continue to hold up the cryptocurrency and its stability at a crucial support level of $3,200.
Ethereum Set For A Breakout
In a Tradingview post, crypto analyst RLinda delves into some compelling analysis concerning Ethereum’s current performance. On the price side of things, Ethereum corrected by a massive 11.5% in just two days after the launch of Spot Ethereum ETFs on July 23. Although it has since recovered some of these losses, Ethereum is still in this corrective phase bounded by tests of key zones of interest around the 0.5 Fibonacci retracement level and also testing the 200-day moving average (MA-200).
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RLinda’s analysis highlights that this corrective test of the MA-200 prompted a significant breakdown below the critical support level of $3,200, with Ethereum’s price bottoming out at $3,115 on July 25. However, this dip below $3,200 proved to be a false breakdown, as it triggered a strong influx of buyers who successfully prevented further declines.
To sustain the broader bullish momentum, RLinda emphasizes the importance of bulls maintaining Ethereum’s price above the $3,200 support level. If they succeed, it could pave the way for a renewed bullish rally, potentially driving the price to break through key resistance levels and target the $4,000 to $4,900 range.
“The main task of the bulls is to keep the defense above the zone of interest at $3200. Further it remains to wait for resistance retest with the purpose of its breakthrough and further bull run to $4000 – $4500 – $4900,” the analyst said.
Achieving this bullish resurgence would require Ethereum to overcome significant resistance around $3,357 and $3,540, which are identified as strong order blocks.
Current Price Action
At the time of writing, Ethereum is trading at $3,370, having rebounded by 4.78% from a low of $3,219 in the past 24 hours. This recovery places the cryptocurrency just above RLinda’s first resistance level of $3,357.
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Ethereum’s trajectory could unfold in one of two ways. The cryptocurrency might continue its upward momentum and test the next significant resistance at $3,540. Successfully surpassing this level could pave the way for a breakthrough above the order block, signaling further bullish potential up until $4,900. On the other hand, Ethereum could face a reversal, potentially dropping back below $3,300. This would suggest a retest of lower support levels and a possible extension of the consolidation phase.
Featured image created with Dall.E, chart from Tradingview.com