- Ethereum price falls into a powerful support zone.
- A bearish fake-out setup could trap short-sellers.
- A quick return to the $4,000 value area is expected.
Ethereum price has faced expansive bearish activity over the past eight days. Since the open yesterday (January 5), Ethereum has lost nearly 19%, moving from $4,047 to today’s low of $3,300. Further downside pressure should become more complex.
Ethereum price finds support at $3,250
Ethereum price action has undoubtedly frayed the nerves of many bulls recently. ETH is now in its ninth week of a broader corrective move south, but that will probably end here very soon.
Sellers were defeated, handily, at the $3,250 value area. It’s no wonder why there was such an abrupt halt to selling pressure. The weekly Kijun-Sen, 38.2% Fibonacci retracement, and a high volume node share the $3,250 value area. The expected price action for Ethereum price is a return to the $4,000 value area.
The oscillators support a bounce off of the $3,250 level as a launching pad for a new leg higher. The Relative Strength Index is currently testing the first oversold level in a bull market (50). However, the most critical condition is the hidden bearish divergence between the candlestick chart and the Composite Index.
If traders are looking for solid evidence that a bottom is likely in and the bull market is about to resume, then hidden bullish divergence appearing while price hits a strong support zone is often all the evidence needed to confirm that future bullish movement. In addition, because a significant number of short positions were added after Etheruem price moved below the last bull flag, an incoming short squeeze will exacerbate any higher price movements.
ETH/USDT Weekly Ichimoku Chart
If Ethereum price closes below the weekly Kijun-Sen, that will invalidate the current bullish reversal outlook.
