As the crypto market bounces, a key indicator has flashed a key bullish signal on the Ethereum (ETH) daily chart, suggesting the end of its six-month downtrend could be near. However, some analysts have warned investors of a possible bull trap and a subsequent reversal to new lows.
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Ethereum Eyes Trend Reversal
Ethereum kicked off the week by breaking above $2,200 for the first time in weeks, reaching a one-month high of $2,320 on Monday morning. The cryptocurrency has been trading between $1,825 and $2,150 since the early February crash, failing to break out of this range despite multiple attempts.
Over the past week, the King of Altcoins has bounced 20% from last Sunday’s lows, printing seven consecutive green candles in the daily timeframe. Amid this performance, ETH has weekly closed above the $2,000-$2,150 area, setting the stage for a potential retest of the one-month resistance as support.
Market observer MacroCRG affirmed that ETH is currently the strongest out of the big three: Bitcoin, Ethereum, and Solana. Notably, it has rallied over 9.7% and 14.5% in the weekly and daily timeframes, recording the strongest performance among the top 10 cryptocurrencies by market capitalization.
In addition, it has moved above the 50-day Moving Average (MA) for the first time in 56 days and is back into the 12H Ichimoku Cloud for the first time in 55 days.
Analyst Ali Martinez shared that another key indicator used to identify the current market trend had flashed its first bullish signal in six months, which “just signaled the end of the downtrend.”
According to the X post, the SuperTrend indicator has flipped from Sell to Buy for the first time since September, highlighting the cryptocurrency’s price breakout and institutional demand.
As he noted, in the last two instances in which the SuperTrend showed a Buy signal, Ethereum rallied 52% and 174%, with the latest move leading to its August all-time high (ATH) of $4,946.
“We’ve survived the grind from September to March,” the analyst asserted. “The next key levels to watch are $2,400 and $2,600.”
Breakout Or Bull Tap?
Market watcher Ted Pillows also underscored ETH’s recent performance, asserting that now that $2,150 was reclaimed, “there’s not much resistance for Ethereum until the $2,400 zone.”
However, he warned that the bullish momentum may be short-lived, suggesting a bull trap could be unfolding and a reversal toward its potential market bottom could follow the ongoing price move.
“IMO, ETH could tap the $2,400 zone, as I have been saying for days, before a reversal to new lows,” the X post reads.
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The analyst explained that Ethereum has been trading sideways, consolidating between two key liquidity clusters: one around $2,200-$2,600 and another around $1,400-$1,700.
He suggested that both liquidity clusters will be taken out in the near future. “First, Ethereum could rally towards the $2,400 level to wipe out late shorts. Then, ETH will start its reversal and hit new lows,” he cautioned.
Featured Image from Unsplash.com, Chart from TradingView.com
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