Ethereum Price Analysis Powered by AI

Ethereum Faces Steep Breakdown: Major Support Breached—Is More Blood Ahead?

March to Early May:
- ETH was consolidating between approx. $1800 and $2100.
- There was a significant rally from early May, breaking out above $2200, leading to a high above $2700 in late May.
Recent Weeks (Mid-May to now):
- The price peaked at $2784.75 (May 29), followed by a rounding top structure and an accelerated breakdown.
- This correction was persistent but seemingly controlled, with lower highs and a stair-step downward pattern, characteristic of a broadening or distribution phase.

Prices oscillated sharply between $2530 and $2682, but notably failed to reclaim the May 29 peak.
On June 5, the price collapsed sharply from the $2600-$2608 range, breaking multiple local supports, and closing the day at $2401.57 – a drop of >7.5% in a single daily candle.
This swift decline is uncharacteristic unless major liquidations, news, or macro factors have contributed. Volume surged into the close, reflecting panic selling.

From $2620 (last night), ETH dipped gradually to $2590, then plummeted, with a waterfall drop from $2590 to $2560, then to $2530, and finally to $2408 by 20:00 UTC, closing the current bar at $2401.
Each support level was breached with minimal resistance and expands the scope of the recent breakdown.

Immediate Resistance: $2500 (recent support, now resistance), $2600, $2660
Immediate Support: $2400 (current price and close), previous swing low is far below, around $2320 and $2200
Daily Chart Support Zone: $2200-$2280 (key for larger structure)

The recent price action forms a large bearish engulfing candle on the daily, engulfing at least 5 prior days' ranges.
Hourly sequence shows a descending staircase – lower highs and lower lows.
No bullish reversal patterns are present. Last few hours signal classic capitulation candles (long bodies, minor lower wicks, no clear reversal volume spike yet).
No significant hammer, doji, nor bullish engulfing on hourly or daily.

Surging volume on sell-off candles indicates forced selling, liquidations or panic exits.
No evidence of a volume climax at the $2400 level yet (suggests forced selling could continue until major volume spike appears or key long-term support is approached).
Volume was exceptionally high during the $2600-$2400 collapse versus prior sessions.

Not explicitly provided, but price behavior signals extremely oversold short-term conditions (likely RSI < 30 on both hourly and 4H).
MACD on daily or 4H likely shows a strong bearish cross.
Stochastics would be deep into oversold territory short-term but could remain there given breakdown strength.

50-day SMA: Likely near $2600–$2550 (recent congestion zone).
200-day SMA: Likely lower, perhaps near $2100–$2200.
Price has decisively broken under both the 20 and 50 SMAs today, a bearish trigger.

ATR (Average True Range):
- Weekly ATR was tightening prior to May, but expanded sharply during the breakout and is now at a peak, with daily ranges exceeding $200–270 in recent sessions.
This volatility expansion usually precedes multi-session trending (in this case, downward).

Most liquid support in recent months was $2530–$2600 (now lost).
The volume profile likely shows air below $2400 until the next confluence zone, which is $2200–$2280 (mid-April and early May consolidation).

Market sentiment has shifted from early May euphoria to fear and potential capitulation.
Rapid, high-volume selloff into market close reflects panic and forced liquidations.
Typical bottoming does not happen without either a massive reversal candle with huge volume or a base-building range—both are absent.

Using the swing low near $1500 (April 8) and swing high at $2785 (May 29), the 50% retrace is around $2140; 61.8% is about $1986.
$2400 is roughly the 38.2% retracement and now being tested as support.
A major flush toward $2280–$2200 area (prior consolidation and breakout level, near 50%) is plausible if panic extends.

Similar ETH price collapses in the past (e.g., 2021, 2022) showed that price often overshoots primary supports on initial flushes before stabilizing.
A bounce can occur after such panic, but when the macro structure points downward and support is decisively lost, sellers tend to dominate for several sessions afterwards.

Given the break of $2600 and the violent move, any small bounce is likely a short-selling opportunity into first resistance (prior supports at $2500–$2530).
With current price at $2401, rallies up to $2450–$2500 will likely face significant selling – an optimal short entry zone.
Downside risk: price may flush to $2280–$2200 before a meaningful reversal or base is built.
Upside risk: strong bounce reclaiming >$2600 invalidates the bearish setup (currently low probability given structure).

Bearish Probabilities:
- High probability of further downside as structure is broken, panic not yet resolved, and key support levels are lost.
- Low probability of sustained recovery without base-building and signs of absorption.
Thus, the optimal trade, based on all convergent evidence, is to sell (short) into the next minor bounce.
Entry: Ideally between $2450–$2500 (wait for a weak bounce, or enter partial at market, add at $2450–$2500).
Target: Downside target $2280 (may be reached in next 24h if panic persists; safer to trail stop if new volume spike appears on the decline).

CONCLUSION:

Trend, momentum, volume, order flow, and price structure ALL suggest that further downside is likely imminent. Risk/reward does not currently favor long entries. Best approach is capitalize on short-term bounces back to broken support as shorting/re-entry opportunities, targeting the next major liquidity zone at $2280 (potentially as deep as $2200 if panic intensifies).