Ethereum has been on a tear lately, potentially heading for new record highs. But there’s a potential roadblock: a CME gap.
What’s a CME Gap?
CME gaps are price gaps that appear on the Chicago Mercantile Exchange’s Ethereum futures chart. Historically, these gaps tend to get filled—meaning the price eventually retraces to cover the gap. In Ethereum’s case, this gap sits around $4,080, roughly 15% below the current price. This could mean a significant price drop is on the horizon.
Resistance and Reversal Zones
Several factors could trigger a price correction:
- Resistance at $4,868: This is Ethereum’s previous all-time high, and bears are likely to push the price down from here.
- Reversal zone around $4,680: This adds to the pressure for a price drop.
- CME Gap at $4,185-$4,080:
This is the main concern, suggesting a potential retracement to fill the gap. This could trap investors who bought recently.
Elliot Wave Theory and the Big Picture
Interestingly, one analyst suggests Ethereum’s price movement follows the Elliot Wave Theory. This theory predicts a five-wave pattern, with the current uptrend possibly being only the beginning of the final, major wave (Wave 5). This Wave 5 could lead to new all-time highs, potentially pushing Ethereum past $5,000.
However, if the bulls lose control below $4,000, a deeper correction could occur, potentially filling another CME gap as low as $3,417-$3,461. But if Ethereum can break through $4,800, this bearish scenario might be avoided.
The Bottom Line
While Ethereum’s recent rally is impressive, the looming CME gap and other technical indicators suggest a potential price correction is possible. Whether this turns into a significant crash or a temporary dip remains to be seen.
