Ethereum (ETH/USD) has pulled back from its recent peak above $2,850 and is currently consolidating around the $2,600 level, having encountered significant resistance at the upper boundary of its trading range.
The second-largest cryptocurrency appears to be forming a potential bearish reversal pattern after failing to sustain momentum above key resistance levels, suggesting that sellers have regained control in the near term.
Recent price action shows Ethereum testing the lower boundary of its range around the $2,600 mark, with the asset now trading below both its short-term and medium-term moving averages. This shift in price structure indicates that the bullish momentum that carried ETH to multi-week highs has begun to wane, potentially setting the stage for a deeper correction if current support levels fail to hold.
The rejection from the $2,850 resistance zone was particularly notable, as it coincided with significant selling volume that has since pressured the cryptocurrency lower. This development suggests that institutional and retail traders alike may be taking profits at these elevated levels, creating headwinds for any immediate recovery attempts.
Potential Trend Shift
The moving average configuration has undergone a notable transformation over the past week, with Ethereum now trading below its key dynamic support levels. The shorter-term moving averages, which previously acted as reliable support during the recent uptrend, are now providing resistance on any bounce attempts, indicating a potential shift in market sentiment.
The gap between the moving averages has also begun to narrow, suggesting that the bullish momentum that characterized Ethereum’s recent rally is diminishing. This compression often precedes more significant directional moves, making the current price action particularly crucial for determining ETH’s medium-term trajectory.
The stochastic oscillator has moved into oversold territory, indicating that selling pressure has intensified considerably. However, the oscillator still has room to decline further, suggesting that additional downside could materialize before any meaningful bounce occurs. This reading implies that Ethereum bears may maintain control in the near term.
Key Ethereum Levels
From a Fibonacci retracement perspective, Ethereum is currently testing the 38.2% retracement level of its recent rally, which coincides with the $2,600 psychological support zone. A breakdown below this level could trigger additional selling toward the 50% retracement near $2,525, while a deeper correction might target the 61.8% Fibonacci level around $2,450.
The MACD indicator has begun to show bearish divergence, with the histogram printing lower highs while price action failed to establish new peaks above resistance. This technical development often foreshadows trend reversals and suggests that momentum has shifted in favor of the bears.
Should Ethereum fail to reclaim the $2,700 level in the coming sessions, the path of least resistance appears to be to the downside. Conversely, a decisive break above this resistance could invalidate the bearish scenario and potentially target a retest of the recent highs near $2,850.
