After a strong breakout from the consolidated range, Ethereum rose above $4,200, creating the possibility of entering the third wave of the price cycle. If this scenario turns into reality, ETH could be aiming for a $5,600 ride along Fibonacci predictions and typical wave extension targets.
Technically speaking, ETH’s rally was bolstered by a clear break that surpassed the psychological $4,000 barrier and a robust volume spike, one of the highest daily trading spikes in months. The RSI moved to over 70 over-acquisition zones, but the 20-day EMA (~$3,647) remains reliable and dynamic support.
While it does not necessarily limit the chances of rising during a strong Wave 3 rally, this indicates short-term overheating. Investors and traders need to focus on three important levels: The area ETH is currently testing is immediate resistance between $4,300 and $4,350. The $4,600 to $4,800 range can be seen in the daily range above.
Support at $4,000: Retest and successful defense here demonstrate that previous resistance was supported and strengthened the bull’s case. The third wave is stalling if you lose your major support level at $3,650, and could cause a deeper retrace towards a 50-day EMA near $3,190.
If ETH maintains its momentum and avoids a significant drop, a third wave forecast for $5,600 is still possible. Traders should keep in mind that three meetings frequently attract participants who are often late.
