As market volatility continues, Ethereum (ETH) is down 3.1% in the daily time frame and is once again trying to hold a key price area as support. Despite the dip, some analysts have suggested that the Altcoin king will soon embark on a new phase of expansion.
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Ethereum retests key support zone
On Wednesday, Ethereum fell below the $4,000 level for the third time this week, retesting a key area before bouncing. The cryptocurrency has been trading within the $3,800-$4,800 price range in the daily time frame since its early August breakout.
During the recent market correction, ETH briefly lost its local range, hitting a two-month low of $3,435 last Friday. Nevertheless, the price quickly recovered from the lows and reclaimed the $4,000 area over the weekend. Since then, the king of the Altcoins has been floating around the lows, trying to regain the middle zone of the range, but ultimately failing.
As the price retested the $3,900 area, Daan Crypto Trades noted that despite this week’s volatility, Ethereum was able to maintain daily closes above the $4,100 area, indicating that a recovery from this level is still possible today. Nevertheless, failure to hold this area within the daily time frame could trigger a drop towards the $3,800 support and risk a possible dip towards the $3,400 mark.
The trader also warned that the cryptocurrency must also hold the region of $4,100 on the weekly time frame to maintain the current structure and target a climb to the highs around $4,800. He confirmed that “the real fun starts when this can trade and close above $5,000. Until then, we will remain within a range within these two levels.”
So does Ali Martínez marked that ETH could see a 28%-53% rally based on Ethereum’s MVRV Extreme Deviation Pricing Bands. According to the analyst, if the price holds the $3,900 level, which is a key support, “the price bands point to a move towards $5,000 or even $6,000.”
Will there be a repeat of ETH’s 2021 Playbook?
Other market watchers have also shared a positive long-term outlook for ETH, suggesting that investors do not have to worry about the recent price declines. Crypto Analyst Jelle be from the 18-month declining, widening wedge formation on Ethereum’s chart, which was broken during the third quarter rally.
Jelle noted that the cryptocurrency is “just holding the breakout area as support,” consolidating between the breakout area and the ATH of the last cycle. To the analyst, ETH appears “very poised for a rapid expansion higher” once it moves out of the accumulation range.
Meanwhile, Crypto Kaleo emphasized the structural similarities between the start of the last bull market’s breakout and Ethereum’s current price action. According to the chart, the King of Altcoins traded within a two-year range during the previous cycle, retesting the range resistance twice and briefly diverging below the range low before breaking out.
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Subsequently, ETH experienced a multi-month accumulation period above the breakout level before continuing its rally to new highs. Kaleo’s post highlighted that the cryptocurrency appears to be repeating a similar playbook, currently consolidating before potentially resuming its course towards higher targets in the next few months.
At the time of writing, ETH is trading at $4,001, down 11.3% in the weekly time frame.
Featured image from Unsplash.com, chart from TradingView.com