Ethereum (ETH): Strategic Entries and Potential Drops
Updated
For Ethereum, we're observing a chart pattern that has developed a weak divergence, and we believe it is now correcting wo the end of Wave 4 of Wave (3). We plan to place multiple entries; our first entry was at the upper range of the Wave 4 target area around $3200. However, the price has continued to decline. We are now looking to DCA and make a second entry at $2600, with a final entry in our worst-case scenario at $2277. We suspect there might be further downside potential, but the extent is uncertain, and we intend to buy additional spots. Those already in from the first entry can choose to hold or buy more—this is on yourself. Given the expected market weakness, there could be opportunities to establish substantial long-term spot positions.
Upon examining the annual VWAP, we're observing a scenario where the 2021 VAH is acting as a current resistance level. We briefly surpassed this level but quickly fell below it again. We believe there could be good entry opportunities in the area between the 2021 VWAP and the 2022 VAH, which closely align around $2,500 to $2,450. Below this, the next significant level could be the 2023 VAH around $2,000, indicating a substantial gap in the middle. This will be elaborated further in subsequent sections of our analysis.
However, this setup on the larger chart presents a probable scenario, yet we're also considering managing our positions above this range as shown above. The 61,8% Fibonacci retracement is still the second entry target for us.
12H
On the quarterly VWAP, we observe that the VWAP from Q4 2021 acted as resistance at exactly $4,100. Since then, we've experienced a downward trend and identified several levels acting as resistance or support. Currently, we're situated right at the 2022 Q1VWAP and the 2021 Q3VWAP, which could provide enough support to push us above the $3,000 mark. Ideally, surpassing the $3,200 mark would be beneficial, but we perceive this as challenging since the current quarter's VWAP is likely to act as resistance around $3,200. We think it's possible we might revisit the levels of the 2021 Q2VWAP to the 2024 Q1VAL, ranging between $2,670 and $2,426. While we don't anticipate falling much below these levels, it's not outside the realm of possibility. These remain our critical levels for now.
4H
Considering the monthly VWAP, there's a scenario where we might see an upward push toward the Previous Monthly VAL, given that the February VWAP has acted as support three times already. This aligns with the desire to see Ethereum exceed $3,200, which would surpass both the February VWAP high and the Previous Monthly VWAP. Achieving and maintaining a position above this level is crucial for a sustained upward move.
If we fail to reclaim and hold this level, it's plausible that Ethereum could revisit lower levels, potentially down to the February VAL around $2,500. Holding above the February VWAP is vital; otherwise, we might see a retracement to these lower support levels.
Upon examining the annual VWAP, we're observing a scenario where the 2021 VAH is acting as a current resistance level. We briefly surpassed this level but quickly fell below it again. We believe there could be good entry opportunities in the area between the 2021 VWAP and the 2022 VAH, which closely align around $2,500 to $2,450. Below this, the next significant level could be the 2023 VAH around $2,000, indicating a substantial gap in the middle. This will be elaborated further in subsequent sections of our analysis.
However, this setup on the larger chart presents a probable scenario, yet we're also considering managing our positions above this range as shown above. The 61,8% Fibonacci retracement is still the second entry target for us.
12H
On the quarterly VWAP, we observe that the VWAP from Q4 2021 acted as resistance at exactly $4,100. Since then, we've experienced a downward trend and identified several levels acting as resistance or support. Currently, we're situated right at the 2022 Q1VWAP and the 2021 Q3VWAP, which could provide enough support to push us above the $3,000 mark. Ideally, surpassing the $3,200 mark would be beneficial, but we perceive this as challenging since the current quarter's VWAP is likely to act as resistance around $3,200. We think it's possible we might revisit the levels of the 2021 Q2VWAP to the 2024 Q1VAL, ranging between $2,670 and $2,426. While we don't anticipate falling much below these levels, it's not outside the realm of possibility. These remain our critical levels for now.
4H
Considering the monthly VWAP, there's a scenario where we might see an upward push toward the Previous Monthly VAL, given that the February VWAP has acted as support three times already. This aligns with the desire to see Ethereum exceed $3,200, which would surpass both the February VWAP high and the Previous Monthly VWAP. Achieving and maintaining a position above this level is crucial for a sustained upward move.
If we fail to reclaim and hold this level, it's plausible that Ethereum could revisit lower levels, potentially down to the February VAL around $2,500. Holding above the February VWAP is vital; otherwise, we might see a retracement to these lower support levels.
Note
Let's also take a long-term look at Ethereum on the yearly VWAP chart. We observe that we continue to trade below this year's VWAP, which suggests that it hasn't been respected as a consistent level. Therefore, we anticipate potential support between $2,500 and $2,400, coinciding with the 2021 VWAP and the 2022 VAH. These are levels where we might consider looking for new long positions. While a reversal could occur before reaching these levels, it's also quite feasible that we could see further declines in the long-term scenario. There's a possibility that we could initially rise significantly, perhaps up to $3,520, before experiencing a downward correction. For a shorter-term analysis, we'll examine other charts more closely.
On the Ethereum quarterly chart, we've respected the VWAP for this quarter to such an extent that we've seen significant selling, as shared in our group. We have now found our first reaction down to the VWAP from Q1 2022. The question remains whether we can hold this level. If we fail to maintain it, we should expect to drop further, potentially down to at least $2,669. It could even extend lower, as discussed in our last report. For now, we anticipate a strong upward movement, although there is still some uncertainty about whether this level will hold.
While we have managed to hold on the last few occasions, it is uncertain if we can sustain this a fourth time in such a short period. If we do, it would be a clear sign of strength. If not, we might see a significant sell-off. Either way, we remain open to all possibilities. Depending on how Ethereum develops over the next week, we will likely be able to identify new potential scenarios.
As anticipated, on the monthly chart, we've almost perfectly respected the February VWAP and ascended to the Previous Month VWAP up to $3,225, which was perfectly respected before we saw a sell-off. The current month's VWAP tends to be less respected. It appears that market participants in Ethereum are focusing on the VWAP and VAL from the previous month, as the level at $3,032 continues to hold. Until we can flip this level and sustain above it, we do not see any viable short-term long positions in Altcoins, as it would be too risky.
We still entertain the scenario that prices could drop to $2,500, down to the February VAL. As long as we oscillate between $2,850 and $3,030, we're likely to see a lot of sideways movement, and a clear direction might not be discernible. This uncertainty does not present favorable conditions for short-term entries or trading setups in Altcoins; we'll need to wait and see what decisions Ethereum and market participants make.
Note
Buy the Rumor, Sell the News?? - Ethereum ETF Thoughts 
Why isn't ETH pumping right now? Here are some possible reasons:
• No capital inflow: The ETFs haven't started yet, so there's no fresh capital inflow.
• Early buyers: Since the SEC decision earlier this week, many have already bought what they wanted.
• Regulatory hurdles: Only the 19b-4 filings were approved today, not the S-1 forms. In contrast, the Bitcoin ETF approval had the S-1 forms ready, allowing for a quick trading start.
• Delegated authority: The approval by "delegated authority" could still be challenged within the next 10 days.
A comparison with the BTC ETF launch:
• Price increase Q3 last year: Much of it due to speculation that a spot BTC ETF was imminent.
• Market volatility from Cointelegraph post: Notorious events like the Cointelegraph posts on October 15 caused significant market volatility.
• Serious discussions in January: Suddenly, it became likely that the ETF would be approved that month.
• BTC ETF approval: The SEC approved the BTC ETF on Wednesday, January 10.
• Immediate +5% pump: An immediate +5% pump, followed by a significant selloff that lasted almost 2 weeks and severely impacted the market.
• Recovery and new ATH: BTC recovered around 39k and almost doubled to a new all-time high.
Possibility for Ethereum:
• Buy the Rumor: Massive price increases in anticipation of the event.
• Sell the News: Market downturn as the event is already priced in.
• Delayed Fuse: Long-term bullishness is processed by the market over a longer period.
Summary and Conclusion:
While the exact behavior of the market is not 100% sure, historical patterns show that such events often follow predictable cycles. The "Buy the Rumor" phase leads to significant price increases, followed by a "Sell the News" reaction once the event occurs. Long-term, a "Delayed Fuse" phase may occur, where the market processes the long-term positive impacts of the event. The Ethereum ETF could play a crucial role in establishing Ethereum as a significant asset in the long term. With increasing acceptance and institutional interest, we could see sustainable price increases and broader adoption of Ethereum-based applications. The potential for DeFi (Decentralized Finance) and smart contracts could be further promoted by the ETF.
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