Ethereum has been setting up an increasingly interesting structure on the 4 hour chart, and today we take a closer look at what may be forming. As many readers know from previous InvestingLive analysis, I like to keep chart work simple whenever possible. Clean structures often tell the clearest story, and Ethereum is now giving us one of those situations, as I show in the following Ethereum futures technical analysis:
At the moment, ETH futures are inside a well-defined rising channel, and inside that channel we have the potential formation of a bull flag. It is only a potential pattern for now, because for this to activate, price must break out above the 3,250 area and actually sustain that move. If buyers manage to push through and defend that breakout, the pattern can play out very strongly. In pure technical terms, this structure alone allows for a continuation move that can reach toward the 5,000 area.
That is the optimistic scenario, but we are not there yet. We need more information.
A very important reminder is that the FOMC meeting is in two days. This means a large part of the market is waiting for clarity on whether risk-on traders or risk-off traders will take control next. Crypto often pauses right before key macro events, and this looks like one of those pauses.
Because of that, we also need to stay open to the alternative scenario. Ethereum can easily make another leg down before any breakout attempt. That leg down can take price into the mid-channel zone around 2,710. In a deeper move, ETH can even revisit the lower band of the channel, which sits much lower. These types of structures can take time to develop, and sometimes a pullback takes several days or even a couple of weeks to complete. If we go even deeper toward the 2,200 to 2,300 region, that would be an attractive buy zone in my view, especially for longer-term dip buyers.
There is also the possibility of a fake-out around the mid-channel. Price can dip slightly below that area and then recover, which is something we already saw in a previous swing where ETH created a small descending triangle or wedge before breaking upward. If this pattern repeats, the next touchpoint on the lower area of the structure could be the point where Ethereum gathers enough energy for a successful breakout.
Why would the next touchpoint matter? Because channels often need multiple confirmations. This one already has four touchpoints, which is enough for traders to take it seriously. If price comes down again, respects the structure, and turns upward, that can be the exact moment where the breakout becomes statistically more likely. This is why patience is important, especially with the FOMC approaching.
Alongside the manually drawn channel, we also have a colorful regression channel on the chart. This tool is available in most platforms under terms like regression trend or regression channel. Although the names vary, the idea is the same. It is a mathematically defined path that shows you the center of price action using linear regression, with parallel borders determined by standard deviation.
This is a powerful tool for all levels of traders. Unlike manually drawn trend channels, the regression channel removes some of the guesswork. It shows the natural statistical path of the market and makes it clear when price is extended to either side. That extension often leads to a reversion toward the mean, which is the center line. For example, the recent fake-out to the upside offered a clean reversion trade back to the middle, a move of more than 4 percent. With leverage, that alone can be a very meaningful trade.
The colors in the regression channel also help visually. When price dips into the red below the midline, momentum is more bearish. When price climbs into the green, momentum shifts more bullish. It is not perfect, but it gives a helpful structure that complements your own channels. For standard deviation settings, I usually use 1.68 or 2, but what matters most is how price interacts with your chosen configuration. Adjust it so that it reflects the behavior of the market you trade.
REMEMBER, Crypto bulls:
Ethereum futures will turn very bullish if price breaks the bull flag and holds above the 3,206 to 3,250 breakout zone. Traders who rely on confirmation may even wait for two consecutive daily closes above that level. If that happens, the probability of a significant move higher becomes much stronger. It is also common for breakouts to pull back and retest before continuing, and that is where volume becomes a key part of the story. If buyers step in aggressively during the retest, you will see it reflected on the chart through higher volume. If volume is missing, it can be a warning that the breakout is weak or temporary.
These patterns can be excellent opportunities for reversals and upside continuation, but they must be validated by multiple touchpoints and confirmation signals. In the current structure we already have enough touchpoints for the pattern to be taken seriously.
Trade Ethereum at your own risk.
You are welcome to return to investingLive.com for more updates. We also publish periodic tradeCompass insights for Ethereum, Bitcoin, and other instruments for traders who want target levels, risk management guidance, and both short term and swing perspectives.
Thank you for reading and stay tuned for more.
