Ethereum (ETH) is showing strong signs of a potential bullish reversal, with technical analysis revealing a Morning Star candlestick pattern on monthly charts. Despite impressive gains of 37.7% over the past month, ETH still trades 33% below its June 2024 levels, setting up an intriguing scenario for investors.
Technical Analysis Points to Major Ethereum Breakout
As key support at $2,500 continues to hold, multiple technical indicators are aligning to suggest a significant upward move could be imminent for Ethereum:
- Morning Star candlestick pattern formation on monthly charts
- Price holding above the critical 200-day EMA
- Bullish flag pattern breakout on daily timeframes
- Strong support established at $2,550
Institutional Interest Drives ETH Momentum
Beyond technical factors, institutional adoption continues to accelerate:
- ETPs recorded $286 million in net inflows last week
- Spot ETH ETFs saw $564 million inflows in May (up from $66 million in April)
- Abraxas Capital staked $7.5 million worth of ETH
Supply Dynamics Support Bullish Case
A significant supply squeeze could be forming as nearly 300,000 ETH left Binance between mid-April and mid-May. This reduction in exchange supply, combined with increased staking activity, suggests growing holder conviction.
Price Targets and Key Levels
Multiple analysts have provided price targets:
- Immediate resistance: $2,650
- Major target: $3,800 (based on technical breakout)
- Critical support: $2,550
FAQ
What is a Morning Star pattern?
A Morning Star is a three-candle bullish reversal pattern consisting of a large bearish candle, a small indecision candle, and a strong bullish candle that closes well into the first candle’s body.
Why is institutional interest significant?
Institutional inflows provide sustained buying pressure and legitimacy to the asset, often leading to reduced volatility and steady price appreciation.
What role does ETH staking play?
Staking reduces circulating supply while providing network security and generating yields for participants, creating a positive feedback loop for price action.
