Ethereum (ETH/USD) is in a strong uptrend. The bullish momentum is similar or even stronger than Bitcoin’s recent surge above $50k.

But strong bearish candlesticks are now visible on the 4 hour chart… Will this bearish volatility change the outlook? Let’s review the key wave and chart patterns.

Price Charts and Technical Analysis

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The ETH/USD recent surge up has been strong. Price moved from $400-$500 to the $2,000 resistance level in just 3 months.

Now bearish pressure seems to be actively pushing price action lower again. Is this a reversal or just a retracement?

• In our view, the probability of a retracement is much higher than a reversal. Why? Because the recent push up is a typical wave 3 (pink).
• This means that the current pullback is probably a wave 4 (pink).
• Waves 4 are usually choppy, corrective, and shallow retracements. The 23.6% Fibonacci level already acted as support but price action broke below it. 
• The next support zone is the 38.2% Fib or 50% Fibonacci levels. These Fibs are expected to act as support and should create some bounce to the upside.
• The key pattern to look for is an ABCDE triangle pattern. If this chart pattern emerges, then it indicates the end of the retracement. That should give a green light to the uptrend to continue for a new higher high.

After the price action completes 5 waves (grey) in wave 4 (pink), the uptrend should break the pattern and move north (blue arrow). Only a very deep correction puts the uptrend in doubt (orange and red circles).

On the 4 hour chart, we can see that the ETH/USD bullish momentum is temporarily over. Price has broken below the support trend line (dotted green) and the 21 ema zone.

Price action should be able to reach the 38.2% Fibonacci level where support support is expected. If a triangle pattern does emerge, then there should be multiple ABC patterns visible in each leg.

(Click on image to enlarge)