Ethereum (ETH/USD) – Bearish Breakdown from Rising Wedge | Long-Term Weekly Analysis
Published: May 4, 2025
Timeframe: 1W (Weekly)
Instrument: Ethereum vs U.S. Dollar (ETH/USD)
Exchange: Bitstamp
🔍 Pattern Overview: Rising Wedge Breakdown (Bearish)
This ETH/USD weekly chart showcases a bearish breakdown from a Rising Wedge, a classic reversal pattern in technical analysis. A Rising Wedge typically forms after a bullish rally and is characterized by a narrowing price structure where higher highs and higher lows are made, but the momentum diminishes.
Key Wedge Characteristics:
Higher highs and higher lows, but converging trendlines.
Often forms at the end of bullish cycles.
Usually breaks to the downside when buyers exhaust and sellers step in.
Breakdown target is often projected by measuring the wedge’s height and subtracting it from the breakdown point.
🔧 Structural Breakdown of the Chart
1. Formation Phase:
From mid-2023 to early 2025, Ethereum price formed a Rising Wedge pattern, driven by a strong recovery from the previous bear market lows. However, bullish momentum waned as price action became compressed.
2. Resistance Zone – $3,100:
This level acted as strong multi-month resistance, tested twice, forming a double top. The second failure to break above $3,100 confirmed bearish sentiment and signaled distribution.
3. Support Zone (Broken) – $1,900–$2,100:
A key level within the wedge, this former support zone held the price several times, offering temporary rebounds. The eventual decisive break below this level marked the official breakdown of the wedge.
4. Breakdown Confirmation:
The candle closing below the rising support trendline, with increased selling volume, confirmed the pattern breakdown and opened the door for further downside.
📊 Trade Setup and Forecast
This chart provides a well-structured short opportunity based on a long-term bearish thesis. Here's the proposed trade framework:
🔹 Entry Point:
Current price ~$1,846.
The breakdown has already occurred, and price may be forming a bearish retest of the broken support (now resistance).
🔹 Stop Loss (SL):
Placed at $3,100, just above the double top and wedge resistance.
A move above this level invalidates the bearish structure and suggests a possible trend reversal.
🔹 Take Profit Zones:
TP1 (Conservative Target): $1,154
Intermediate support level.
Also acts as a zone of psychological and structural interest.
TP2 (Full Bearish Target): $333
Derived from the measured move of the wedge height.
Aligns with historic accumulation zones from late 2020 and early 2021.
A long-term macro support.
💡 Risk-Reward Profile:
This setup offers a high reward-to-risk ratio, especially for position traders or investors seeking exposure to long-term market cycles.
🧠 Market Psychology & Pattern Implications
This chart reflects a shift in market sentiment:
The Rising Wedge showed optimism fading as price was squeezed into a narrowing range.
The double top at $3,100 reinforces the psychological barrier where bulls failed to maintain strength.
The breakdown shows control shifting to bears, suggesting a potential multi-month correction.
🧮 Technical Confluence
Volume Spike on Breakdown: Increases credibility of bearish momentum.
Previous Support Zones Broken: Suggest limited buy-side interest at higher levels.
Lower Highs and Lower Lows Post-Breakdown: Indicates early stages of a macro downtrend.
Failed Retest Expected: Bounce to ~$2,000 may face rejection, offering additional short opportunities.
⚠️ Caution & Risk Management
Volatility Warning: ETH is a highly volatile asset. Sudden price moves due to news or macro factors (e.g., Ethereum ETF approval, regulatory developments) could invalidate technical setups.
Macro Context: This analysis is technical in nature. Traders should monitor on-chain metrics, Ethereum upgrades, and global financial conditions.
Alternative Bullish Scenario: If ETH breaks above $3,100 and holds, this entire setup becomes invalid. Price could then aim for higher resistance near $4,000–$4,200.
✅ Summary
This chart suggests Ethereum has broken down from a long-term Rising Wedge, with a potential bearish continuation targeting as low as $333. The current price action aligns with classic technical reversal principles. Unless ETH reclaims and holds above $3,100, the path of least resistance remains to the downside.
📌 Suggested Strategy
For Swing Traders: Look to enter short on rejection from $2,000–$2,100.
For Long-Term Bears: Consider scaling in from current levels with proper stop loss at $3,100.
For Risk-Averse Traders: Wait for a confirmed retest and rejection candle before entering.
Published: May 4, 2025
Timeframe: 1W (Weekly)
Instrument: Ethereum vs U.S. Dollar (ETH/USD)
Exchange: Bitstamp
🔍 Pattern Overview: Rising Wedge Breakdown (Bearish)
This ETH/USD weekly chart showcases a bearish breakdown from a Rising Wedge, a classic reversal pattern in technical analysis. A Rising Wedge typically forms after a bullish rally and is characterized by a narrowing price structure where higher highs and higher lows are made, but the momentum diminishes.
Key Wedge Characteristics:
Higher highs and higher lows, but converging trendlines.
Often forms at the end of bullish cycles.
Usually breaks to the downside when buyers exhaust and sellers step in.
Breakdown target is often projected by measuring the wedge’s height and subtracting it from the breakdown point.
🔧 Structural Breakdown of the Chart
1. Formation Phase:
From mid-2023 to early 2025, Ethereum price formed a Rising Wedge pattern, driven by a strong recovery from the previous bear market lows. However, bullish momentum waned as price action became compressed.
2. Resistance Zone – $3,100:
This level acted as strong multi-month resistance, tested twice, forming a double top. The second failure to break above $3,100 confirmed bearish sentiment and signaled distribution.
3. Support Zone (Broken) – $1,900–$2,100:
A key level within the wedge, this former support zone held the price several times, offering temporary rebounds. The eventual decisive break below this level marked the official breakdown of the wedge.
4. Breakdown Confirmation:
The candle closing below the rising support trendline, with increased selling volume, confirmed the pattern breakdown and opened the door for further downside.
📊 Trade Setup and Forecast
This chart provides a well-structured short opportunity based on a long-term bearish thesis. Here's the proposed trade framework:
🔹 Entry Point:
Current price ~$1,846.
The breakdown has already occurred, and price may be forming a bearish retest of the broken support (now resistance).
🔹 Stop Loss (SL):
Placed at $3,100, just above the double top and wedge resistance.
A move above this level invalidates the bearish structure and suggests a possible trend reversal.
🔹 Take Profit Zones:
TP1 (Conservative Target): $1,154
Intermediate support level.
Also acts as a zone of psychological and structural interest.
TP2 (Full Bearish Target): $333
Derived from the measured move of the wedge height.
Aligns with historic accumulation zones from late 2020 and early 2021.
A long-term macro support.
💡 Risk-Reward Profile:
This setup offers a high reward-to-risk ratio, especially for position traders or investors seeking exposure to long-term market cycles.
🧠 Market Psychology & Pattern Implications
This chart reflects a shift in market sentiment:
The Rising Wedge showed optimism fading as price was squeezed into a narrowing range.
The double top at $3,100 reinforces the psychological barrier where bulls failed to maintain strength.
The breakdown shows control shifting to bears, suggesting a potential multi-month correction.
🧮 Technical Confluence
Volume Spike on Breakdown: Increases credibility of bearish momentum.
Previous Support Zones Broken: Suggest limited buy-side interest at higher levels.
Lower Highs and Lower Lows Post-Breakdown: Indicates early stages of a macro downtrend.
Failed Retest Expected: Bounce to ~$2,000 may face rejection, offering additional short opportunities.
⚠️ Caution & Risk Management
Volatility Warning: ETH is a highly volatile asset. Sudden price moves due to news or macro factors (e.g., Ethereum ETF approval, regulatory developments) could invalidate technical setups.
Macro Context: This analysis is technical in nature. Traders should monitor on-chain metrics, Ethereum upgrades, and global financial conditions.
Alternative Bullish Scenario: If ETH breaks above $3,100 and holds, this entire setup becomes invalid. Price could then aim for higher resistance near $4,000–$4,200.
✅ Summary
This chart suggests Ethereum has broken down from a long-term Rising Wedge, with a potential bearish continuation targeting as low as $333. The current price action aligns with classic technical reversal principles. Unless ETH reclaims and holds above $3,100, the path of least resistance remains to the downside.
📌 Suggested Strategy
For Swing Traders: Look to enter short on rejection from $2,000–$2,100.
For Long-Term Bears: Consider scaling in from current levels with proper stop loss at $3,100.
For Risk-Averse Traders: Wait for a confirmed retest and rejection candle before entering.
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Related publications
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.