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Highlights
- Ethereum could surge by 35% if it breaks through resistance in February.
- February historically delivers positive returns for Ethereum, setting a bullish outlook.
- Key technical indicators suggest a potential reversal in bearish momentum.
Ethereum (ETH) is trading near $3,120 as of mid-week, with market expectations building for a potential rally in February. Historically, February has been the most positive month for Ethereum in terms of returns, and on-chain data suggests that investors might be positioning for a similar move this year. A break above the upper resistance of a falling wedge pattern could see Ethereum rise by 35%, potentially overcoming its three-year high resistance at $4,100.
Despite a generally tough start to 2025, where Ethereum is set to end January with negative returns for the second consecutive year, February could bring a change in market sentiment. Ethereum has posted more positive returns in February than in any other month, with the only exception being the crypto market crash of 2018. If the historical trend holds, Ethereum could witness significant upward movement, as it did in February 2024 when it recorded a 46.28% gain.
On-chain data points to growing investor interest in Ethereum, with notable movements in decentralized finance (DeFi) platforms. U.S. President Donald Trump's DeFi platform recently increased its Ethereum holdings by $250 million, signaling confidence in Ethereum’s potential for growth. Additionally, Ethereum’s daily active addresses surged to a yearly high of over 588,000, reflecting increased engagement on the network.
From a technical perspective, Ethereum’s price action is currently constrained within a falling wedge pattern. If the cryptocurrency breaks above the upper resistance of this pattern and establishes it as support, the price could target a 35% increase. However, Ethereum faces formidable resistance at $4,100, a level that has historically been a strong sell zone in 2024. Further resistance levels are positioned at $3,550 and $3,770.
The Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD) indicators are currently below their neutral levels, signaling that bearish momentum is still present in the market. However, the Stochastic Oscillator (Stoch) has retreated from the oversold region, hinting at a possible reversal in the prevailing bearish trend.
As Ethereum navigates through these key technical and market dynamics, the potential for a breakout remains a focal point for traders and market observers. The convergence of historical trends, on-chain data, and technical indicators provides a mixed but intriguing outlook for Ethereum in the coming weeks. The ability to break through resistance levels could set the stage for a more bullish trend as February progresses.
