Ethereum is showing resistance after testing critical support

TLDR

Ethereum fell below $3,000 for the first time since November, hitting $2,920 before returning to the $3,100-$3,200 range and breaking a key support level between $3,066-$3,160. 4.12 million addresses held 4.9 million ETH. High multi-month opposite head and in some According to analysts, a shoulder pattern is forming that could reach $7,000. Historical data shows that ETH starts negative at the beginning of January, but enters a positive line as February approaches.

The price of Ethereum experienced significant volatility this week, dropping below $3,000 before making its first recovery since November. The second-largest cryptocurrency by market capitalization fell to $2,920 on Monday, marking its lowest point in two months.

The weekend saw Ethereum recover from earlier lows as it traded in the $3,200 to $3,340 range. However, this stability proved to be temporary as selling pressure mounted earlier in the week.

Market data confirmed a critical support zone between $3,066 and $3,160, with around 4.12 million addresses holding 4.9 million ETH. This support level, held earlier in the December corrections, was when the bears were pushing prices lower.

The decline represented a 12% drop from the weekend high, which brought ETH to test the post-election breakout level around $2,900. The market responded quickly to this price point, with buyers stepping in to increase the price by 9% to the $3,100-$3,200 range.

Technical analysis from crypto market watcher Ali Martinez highlighted a resistance level between $3,360 and $3,450, with 4.37 million addresses storing 6.47 million ETH. These price points may present challenges for future upward moves.

The most critical resistance level for #Ethereum $ETH is between $3,360 and $3,450 and key support is between $3,066 and $3,160. pic.twitter.com/gE0vEW35vb

— Ali (@ali_charts) January 13, 2025

Several traders have noticed the formation of a multi-month reversal head and shoulders pattern on the Ethereum price chart. The left shoulder of this pattern formed around $2,800, analyst Rect Capital suggested that pullbacks near $3,000 could develop into the right shoulder.

Trader Mickey Bull sees the latest price action as a “perfect setup for a big pullback.” According to the bull analysis, if the inverse head and shoulders pattern plays out, it may target the $7,000 price level.

Adding another layer to the technical analysis, crypto analyst Crypto Bullet has drawn parallels between current market conditions and Ethereum's behavior in 2021. During that period, ETH showed a Double Top pattern before breaking below the $3,100 support.

$ETH worst case pic.twitter.com/ByDGEah5dk

— CryptoBullet (@CryptoBullet1) January 13, 2025

The 2021 scenario saw Ethereum consolidate for two weeks after losing this support level, before recovering and moving to new all-time highs. Some analysts suggest that the current price action reflects this historical pattern.

Looking at seasonal patterns, data from CoinGlass shows that Ethereum typically experiences weekly negative returns in early January. However, as February approaches, the cryptocurrency often enters a period of positive performance that can last up to six weeks.

Trader Diane stressed the need for crypto traders to look at quarterly returns to get a more comprehensive view of current trends, saying, “The percentages that ETH makes in the first weeks of the year are crazy.”

The cryptocurrency currently faces resistance between $3,360 and $3,450, a zone where heavy trading activity has occurred. This price range may be important in determining the short-term direction of Ethereum.

Monday's drop to $2,920 tested owners' resolve, but a quick recovery indicated strong buying interest at lower levels. A breakout from this support level resulted in a 9% price increase within hours.

Trading data shows that 4.12 million addresses holding 4.9 million ETH were affected when prices fell into the $3,066-$3,160 support zone. This represents a large portion of Ethereum holders who may currently be underwater in their positions.

According to the latest market data, Ethereum is trading at $3,230, which represents an increase of 3% in the last 24 hours. The price has stabilized above the crucial $3,000 psychological level that was briefly breached earlier in the week.

Recent price action has led to what traders identify as the right shoulder in a broad reversal head and shoulders pattern. This technical formation, if completed, could set up the next major move in Ethereum price.