Ethereum Market Insight: The Bear Trap Narrative

Ethereum traders witnessed a classic bear trap formation unfolding today as the digital asset tested lower support levels while maintaining its underlying bullish structure. Yesterday’s optimistic signals from the weekly and daily timeframes promised continued upward momentum, but overnight price action delivered a sharp reality check with ETH dipping toward the critical four-thousand-two-hundred-dollar zone.

This apparent breakdown, however, tells a more nuanced story when examined across multiple timeframes. The shorter timeframes painted an aggressively bearish picture with two-hour, four-hour and six-hour charts showing price falling below all moving averages, negative MACD readings and deeply oversold stochastic indicators. Money flow turned negative and directional indicators confirmed downward pressure. These technical signals would typically suggest capitulation, yet the twelve-hour and daily charts revealed a different narrative entirely. Both timeframes maintained positive MACD values despite downward curves, the cumulative money flow remained in positive territory and the weekly structure showed unchanged bullish dominance with strong directional movement and elevated accumulation metrics.

This divergence between short-term bearishness and medium-to-long-term bullishness created the textbook conditions for a bear trap, where aggressive sellers push price down only to face a swift reversal as stronger hands accumulate at discount levels. Our analysis yesterday correctly anticipated sideways consolidation as price would catch up to faster moving averages before resuming its uptrend, and today’s action validates that thesis perfectly.

The strategic play involves waiting for confirmation of the bounce, potentially entering long positions around four-thousand-three-hundred dollars once price demonstrates its willingness to reclaim current levels, rather than catching a falling knife at four-thousand-two-hundred. Looking ahead to the next trading sessions, the bear trap scenario suggests Ethereum should find solid support in the four-thousand-two-hundred to four-thousand-three-hundred range before staging a recovery toward four-thousand-five-hundred and potentially retesting the four-thousand-six-hundred resistance zone within forty-eight hours.

The weekly chart’s bullish structure remains the dominant force, and this short-term weakness appears to be nothing more than a healthy consolidation that clears out overleveraged longs and sets up stronger foundations for the next leg higher.

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