ETH H4 Price Action: Consolidation or Breakout Brewing?
2025-01-22
Category: None

Market Structure Overview
The ETH/USDT chart on the H4 timeframe indicates a market stuck in a trading range after a prior downtrend. Current price action shows indecision, with multiple tests of support and resistance zones.

Key Observations:
Higher Highs (HH): The last significant HH occurred near $3,450 on January 16th.
Higher Lows (HL): A recent HL formed around $3,200 on January 20th.
New Low (NL): $3,100 was the major NL on January 13th.
Price has been oscillating around the moving average, suggesting a balanced tug-of-war between bulls and bears.
Support and Resistance:
Support: Strong at $3,200, with buyers consistently defending this level.
Resistance: $3,400–$3,450 zone is acting as a ceiling, rejecting bullish attempts.

🐂 Bullish Scenario:

A clear HL at $3,200 suggests bulls are attempting to build a base for a reversal.
Price remains within striking distance of the resistance zone ($3,450), and a breakout could lead to a measured move toward $3,600.
Consolidation near the MA often precedes continuation in the direction of the larger trend.

Bullish Plan:

Entry: Buy above $3,400 after a breakout with strong volume.
Stop-Loss: Place below $3,200 (recent HL).
Profit Target: $3,600-$3,650 (measured move projection).
Probability: 55%, as the chart currently shows neutral consolidation but with a slight bullish bias.
🐻 Bearish Scenario:

The prior downtrend and the double top at $3,450 suggest sellers are still active.
A break below $3,200 would create a LL, potentially resuming the bearish trend.
Inside bars and small range candles indicate a lack of momentum, which could favor bears.

Bearish Plan:

Entry: Short below $3,200 after a confirmed breakout.
Stop-Loss: Place above $3,400 (recent resistance).
Profit Target: $3,100 and potentially $3,000 (psychological support).
Probability: 45%, given the current balance between buyers and sellers.

Educational Patterns for New Traders
Inside Bars:
Look for small candles within the range of a larger candle. They often indicate consolidation before a breakout.
Measured Moves:
Calculate the height of the trading range ($3,200–$3,450 = $250). A breakout could lead to a move of similar size.
Exhaustion Gaps:
Beware of sudden sharp moves toward $3,450; these might signal buyer exhaustion rather than strength.
Higher Highs and Lows:
Bulls need a new HH above $3,450 to confirm strength, while bears aim for a LL below $3,200.


Trader’s Equation Summary
Bullish Plan: Risk = $200 (from $3,400 to $3,200); Reward = $200-$250 ($3,600-$3,650). Reward-to-Risk = ~1:1.25.
Bearish Plan: Risk = $200 (from $3,200 to $3,400); Reward = $100-$200 ($3,100-$3,000). Reward-to-Risk = 1:1 to 1:2.
Final Thoughts:

 ETH is coiling up for a significant move. While the trading range dominates, the breakout direction will dictate the next trend. Stay patient and wait for confirmation! 

What’s your take on ETH’s next move? Do you see a breakout or a continuation of the range? Share your setups and let’s discuss the probabilities!