Ethereum (ETH) Price Approaches Pivotal Resistance Level That Could Determine Its Next Major Move

Ethereum's price is approaching a pivotal resistance level that could determine its next major move. The second-largest cryptocurrency by market capitalization is testing the $2,200 resistance zone

Ethereum’s price is approaching a pivotal resistance level that could determine its next major move. As the second-largest cryptocurrency tests the $2,200 resistance zone, a level that has posed difficulties in the past, analysts are weighing in on the possibilities.

Failure to break this key level could lead to a 13% drop to $1,700, while some foresee a potential bullish reversal if support levels hold.

Ethereum Faces Strong Resistance at $2,200

Ethereum is currently trading within a descending channel, a bearish technical pattern marked by lower highs and lower lows. This pattern indicates continued downward pressure on the asset, indicated by lower lows, and higher lows,suggesting that sellers are likely to prefer higher prices, while buyers are becoming more interested in lower prices.

At the same time, the $2,200 resistance zone aligns with the upper boundary of this descending channel, making it a crucial level for Ethereum’s price action.

Crypto analyst MadWhale highlighted on X, previously Twitter, that Ethereum has struggled to break through this zone on several occasions, with each attempt leading to price rejections and subsequent downturns.

If Ethereum fails to close above this resistance again, it could confirm the bearish outlook and trigger a decline toward $1,700, representing a potential 13% loss from current levels.

Furthermore, Ethereum’s trading volume has seen a sharp decline, dropping by 37.37% in the past 24 hours. Lower trading volume during price increases suggests weak buying interest, which could amplify the risk of a downside move if selling pressure escalates.

Technical Indicators Suggest a Bearish Outlook

Several technical indicators support the bearish case for Ethereum. A rounded top pattern has formed near the resistance zone, signaling declining buying momentum. This pattern, characterized by a series of lower highs and rounding formations, occurs when the pace of price increases slows down, suggesting that sellers are gaining control and stifling the efforts of buyers to push the asset higher. It often precedes a reversal in the prevailing trend.

Volume analysis further strengthens the bearish argument. Recent price gains have occurred on lower volume, while declines have seen increased trading activity. This divergence suggests that sellers remain in control, making it more challenging for bulls to push the price higher. Conversely, when the asset falls, trading volume surges, indicating strong selling interest that overwhelms buyers.

Moreover, the Moving Average Convergence Divergence (MACD) indicator reveals waning bearish momentum. Although the MACD line is approaching a bullish crossover with the signal line, confirmation is required for a potential reversal. If this crossover occurs and is accompanied by rising histogram bars, it could indicate a shift in momentum, opening the door for a possible rebound.

ETH/BTC Testing Critical Support, Signaling Potential Reversal

The performance of Ethereum against Bitcoin (ETH/BTC) is also being closely watched by market analysts. ETH/BTC is currently testing a critical support zone last seen in late 2020. A successful hold at this level could lead to a trend reversal after years of decline, signaling renewed strength for Ethereum against the market leader.

This support zone is defined by the intersection of key Fibonacci retracement levels and a long-term trendline, making it a confluence of technical indicators that could influence the pair’s price action.

Additionally, record-high futures open interest of 10.23 million ETH suggests increasing trader participation, which could influence price action in either direction. A surge in open interest usually precedes heightened volatility as more traders enter the market, placing outstanding futures contracts and anticipating price moves in either direction.

This contributes to greater price swings and instability, making it a crucial period for traders to manage their trades carefully and adapt to the shifting market dynamics.

Analysts Predict Potential Bullish Scenarios

Despite the bearish indicators, some analysts maintain a positive outlook for Ethereum. Crypto analyst Patron highlighted three bullish price targets, provided that Ethereum manages to hold support around $1,980.

His first target is at $2,296, which represents a potential 15% gain from current levels if the price manages to break out of the bearish pattern and encounters weak resistance.

If Ethereum continues to rise and breaks above this target, further upside targets include $2,913 and $4,000. These projections are based on Ethereum reclaiming key support levels and regaining bullish momentum.

For this bullish scenario to play out, Ethereum needs to see an increase in buying pressure and higher trading volume. A breakout above $2,200 with strong volume could invalidate the bearish case and confirm a bullish trend reversal.

Market Sentiment and Future Outlook

At press time, Ethereum is trading at $1,999.75, marking a modest 1.20% gain over the past 24 hours. However, the sharp decline in trading volume raises concerns about the sustainability of this upward move.