Ethereum Nears Crucial Support Test Amid Bearish Pressure

Ethereum (ETH) has faced a decline after struggling near $3,640, testing a bullish trend line with support at $3,325. Maintaining above the 50-day simple moving average is crucial for ETH to begin a new surge. Key resistances lie at $3,640 and $3,800, while major supports exist at $3,120 and $2,900. If the price closes below these supports, a further decline to $2,620 could occur.

Ethereum Faces Crucial Support Test Amid Bearish Pressure

Ethereum (ETH), the second largest cryptocurrency by market capitalization, has recently encountered significant headwinds, triggering a notable decline from its recent peak near $3,640. As the price of ETH continues to fluctuate, analysts are closely monitoring key support and resistance levels to gauge the market's direction.

Ethereum's Bearish Reversal

In the past month, Ethereum has experienced a bearish reaction after reaching a high of $4,082. The cryptocurrency swiftly dropped below crucial support levels at $3,880 and $3,750, breaching the 23.6% Fibonacci retracement level of a substantial increase from $2,172 to $4,082.

A sharp decline ensued, with ETH falling below $3,200. However, bulls stepped in and defended the $3,000 support level. Notably, Ethereum remained above its 50-day simple moving average (SMA), providing some solace to investors amidst the market turmoil.

Testing Critical Support

Ethereum has since recovered some of its losses, climbing above $3,550. However, bears regained control near the $3,640 resistance zone, pushing the price back below $3,550. Ethereum is currently testing a connecting bullish trend line with support at $3,325.

Bears are attempting to force a daily close below the 50-day SMA. Should this occur, and the trend line support is breached, a continuation of the downside trend is likely.

Downside Risks and Support Levels

In the event of a downside breakout, the first major support level is located at $3,120. The next key support lies near $2,900, coinciding with the 61.8% Fibonacci retracement level of the increase from $2,172 to $4,082.

A break below $2,900 and a daily close could intensify selling pressure, potentially driving ETH towards the $2,620 support level in the coming days.

Potential for a Fresh Increase

Conversely, Ethereum bulls could potentially defend the support levels and prevent further declines. In this scenario, the price might recover and test the $3,500 resistance level. The next major resistance is positioned near $3,640.

A decisive move above $3,640 could propel ETH higher, with the next key resistance at $3,800. If bulls clear this level, the price could resume its uptrend and target the $4,080 resistance in the near term.

Overall Market Outlook

Overall, Ethereum's price is approaching critical support at $3,325, which aligns with the 50-day SMA. ETH must hold above this support level to avoid a more significant decline. If the support level is breached, further downside pressure could materialize. However, if bulls can protect the support, a potential recovery towards higher resistance levels remains possible.