Ethereum has recently encountered resistance at a vital confluence zone, specifically at the 0.618 Fibonacci level. With the price dropping back below the point of control, traders are on high alert for signs of a potential deeper downturn or a mere trap.

The price movement of Ethereum (ETH) has reached a pause at a technically significant point, namely the 0.618 Fibonacci retracement level traced from the most recent pivot high to low. This area is reinforced by daily horizontal resistance and a declining VWAP, further solidifying its importance as a critical decision zone. Following several failed attempts to recover, ETH has pulled back, trading beneath the point of control (POC) of the local range.

Key Technical Highlights

• Critical Resistance Cluster: The 0.618 Fibonacci level coincides with daily resistance and a descending VWAP, forming a strong technical barrier.
• POC Loss: The price has fallen below the volume point of control, suggesting that sellers are gaining control in the short-term market dynamics.
• Emerging Bearish Structure: The formation of lower highs alongside a halted breakout increases the chances of a movement toward the next significant support level around $1,540.

In-Depth Analysis

After a significant upward movement, Ethereum’s price has spent several sessions consolidating beneath a key resistance zone. The 0.618 Fibonacci level, an important retracement indicator, is further cemented by daily horizontal resistance and a declining VWAP from the previous major peak. This confluence has created notable selling pressure, resulting in repeated failures to breach this level.

Adding to the caution surrounding the current situation is the recent breach of the point of control in this area. The price has dropped below the highest volume node of the recent range, indicating that the market is rejecting value at these levels. Such a scenario often foreshadows a range rotation or a continuation in the direction of the rejection, which, in this case, trends downward.

The technical framework also reveals a clear short-term bearish structure developing. ETH has struggled to establish higher highs or maintain higher lows, heightening the probability of a larger correction. The next plausible support level is situated around $1,540, which not only represents a structural level from prior sessions but also a zone with identifiable price inefficiencies (e.g., unfilled fair value gaps) that could attract price action towards it.

This scenario suggests a potential 10% decline from current price levels, especially if the recent swing low fails to hold. However, traders should stay alert for the possibility of a fakeout, as Ethereum has previously demonstrated abrupt strength from similar rejection zones.

Looking Ahead: Expected Price Action

Ethereum’s inability to breach the 0.618 confluence zone and the rejection from the POC indicate a heightened probability of rotation towards lower support levels. A drop below the recent swing low could position the $1,540 area as the next target.

On the other hand, if buyers can defend the current levels and reclaim the POC, this could signify a local fakeout before resuming an upward trend. For now, it’s advisable to proceed with caution as the price lingers near a critical threshold.