- Ethereum price action continues to respond strongly from recent lows.
- Price action could develop a nasty bull trap despite a massive bounce from key support structure.
- Bulls must defend recent gains or face renewed selling pressure.
Ethereum price has undoubtedly made some wild swings this week. Dropping below the $3,000 zone caused some jitter among market participants, but so far, buyers have been very supportive and responsive – but that conviction will need to be maintained.
Ethereum price is at risk of retesting $2,500 if bulls fail to hold above critical support
Ethereum price, yet again, is up against a make-or-break price level. The $3,300 price level is the single most crucial price level to watch. The Volume Point of Control, 38.2% Fibonacci retracement, and the weekly Kijun-Sen share the $3,300 value area. A close above $3,300 is bullish, while a close below is bearish.
If bears can close Ethereum price below the $3,300 level on the weekly chart, then an influx of new short-sellers and weak-handed buyers turned sellers will likely enter and push Ethereum lower. In essence, a very nasty bull trap will have been triggered, which could see Etheruem returning to the $2,500 value area.
ETH/USDT Daily Ichimoku Kinko Hyo chart
However, all participants should remember the current condition of the Composite Index on the weekly chart. It hit lows not seen since September 2019 and created extremely powerful hidden bullish divergence. The combination of the historical Composite Index lows and the hidden bull divergence indicate Ethereum still has much room to run higher.
If bulls close Ethereum price at or above $3,300, the next test is the weekly Tenkan-Sen at $3,900.