ETH H&S Insight: Confluence Aligns for January ReversalOverview
On the higher timeframes, ETH is in the process of forming a Head and Shoulders (H&S) pattern. The left shoulder and head are already complete, with price currently downtrending to form the right shoulder. Following an impulsive bullish run to take out the highs, ETH has faced two rejections at those levels, initiating a corrective move lower.
Key Technical Levels and Confluences
1. Support Zone for the Right Shoulder Formation
Primary Target Level: $2800 (aligned with the left shoulder structure).
Support Zone: $2941.12–$2812.7 (a highly confluent range for long positions).
2. Anchored VWAP Analysis
Anchored VWAP from the 12th October 2023 low is currently positioned at $2900, offering dynamic support and aligning with the left shoulder’s structural low.
3. Fibonacci Retracement Levels (From the Impulse Wave)
Fib 0.666: $2941.12
Fib 0.702: $2877.99
Both levels fall within the support zone, reinforcing its importance as a high-probability area for reversal.
4. Fibonacci Extension Levels
From the Current Range:
Fib Extension Target: $2812.7, precisely aligning with the key level of $2800.
From the Higher Trading Range:
Fib 2 Extension: $2893, offering additional confluence with other levels in the support zone.
5. Fibonacci Speed Fan
Drawing the Fibonacci Speed Fan from the 6th September 2024 low to the 16th December 2024 high, the Fib 0.7 level intersects at $2900.
This confluence is projected to align with price action on 9th–10th January 2025, adding a temporal element to this setup.
6. Psychological Level
The $3000 level represents a strong psychological barrier. While the primary support lies lower, price could find an early reaction at this level.
Trading Plan: Long Setup for the Right Shoulder
Support Zone: $2941.12–$2812.7
Primary Trade Setup:
Place long positions within the support zone, focusing on the confluence of levels for a higher-probability reversal.
Scaling Strategy:
Employ a Dollar-Cost Averaging (DCA) approach to gradually build a position.
Consider initial entries at $3000 as a psychological bounce is possible.
Confluence Highlights:
Anchored VWAP at $2900.
Fibonacci retracement levels (0.666 at $2941.12 and 0.702 at $2877.99).
Fibonacci extension targets (current range: $2812.7, higher range: $2893).
Fibonacci Speed Fan (0.7 level at $2900).
Historical structural alignment with the left shoulder at $2800.
Conclusion
ETH is approaching a high-confluence support zone between $2941.12–$2812.7, making it an attractive area for long setups to complete the Head and Shoulders pattern. Utilising a DCA strategy and scaling into positions ensures optimal risk management. Early entries around $3000 could also yield opportunities, as this level holds psychological significance.
