Ethereum's Volatility Hits Multi-Month Low..."Direction to Be Decided in 2 Weeks"

▲ Ethereum (ETH)

As Ethereum (ETH) volatility has dropped to a multi-month low, a short-term decisive point, separating a breakout above $2,382 from a fall below $1,920, is becoming clear.

According to cryptocurrency media outlet BeInCrypto on May 26 (local time), Ethereum broke out of the lower end of its ascending parallel channel last week and fell below the Fibonacci 0.236 retracement line of $2,140, entering a directional battle between buying and selling forces. The Bollinger Band Width Percentile dropped to a multi-month low, signaling that an expansion in volatility is approaching.

On the 4-hour chart, selling pressure still dominated. Ethereum has been moving within a descending parallel channel since April 26 and tested the channel's centerline from below. A breakthrough of the centerline would open up room for recovery to $2,230, but trading volume decreased even during attempted rallies. The Relative Strength Index remained in neutral territory around 55, and it was analyzed that if the price closes below $2,080, it could be pushed back to the lower part of the channel, resuming a bearish rotation.

A rebound scenario also remains. Analyst Crypto Candy believes Ethereum is defending the daily demand zone between $1,942 and $2,015. He stated, “Ethereum is attempting a rebound while holding above the daily demand zone between $2,000 and $1,900. As long as this zone is maintained, I expect a rebound towards $2,400 or higher. This view remains valid as long as it stays above the demand zone.”

On the daily chart, a break from the ascending parallel channel that started on February 7 and a drop below $2,140 were simultaneously confirmed. If Ethereum reclaims the channel, the Fibonacci 0.382 retracement line of $2,382 emerges as the next major resistance, with $2,772 above it. Conversely, if it fails to defend $1,950, the $1,920 support line will be exposed, and further bearish pressure could lead to a larger decline to around $1,750, near the February low.

The Relative Strength Index attempted a rebound in bearish territory but remained around 40, failing to confirm a shift to buying dominance. BeInCrypto explained that volatility compression usually precedes sharp price movements in both directions and rarely lasts more than two weeks. Ethereum's short-term trend is expected to be decided between a recovery to $2,382 and a break below $1,920.

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