Ethereum Futures TradeCompass – Updated January 20, 2025

Current Context:
Ethereum futures (ETH 01-25) are trading around $3,390, with today’s Value Area High (VAH) recently recalculated to $3,416. The price has broken above the psychological level of $3,400, reaching a high of $3,402.5 in the past half-hour. The VWAP and Point of Control (POC) remain dynamic but are critical markers for intraday sentiment. The market remains poised for a decisive move, with clear thresholds for bullish and bearish scenarios.

Bullish Above: $3,416

The Value Area High (VAH) at $3,416 is the key level for a bullish breakout. To confirm strength, two consecutive 30-minute bars must close above this level. Once this occurs, the following upside targets come into focus:

1. $3,492 – Just below yesterday’s VAH, offering the first potential resistance level.
2. $3,533 – Slightly below today’s third upper standard deviation of VWAP, aligning with the next major upside zone.
3. $3,610 – Near the third upper standard deviation of yesterday’s VWAP, just above the psychological round number of $3,600.

Bullish traders should monitor the price action carefully near $3,416 for confirmation. A single close above this level without follow-through could lead to a false breakout.

Bearish Below: $3,357

The Value Area Low (VAL) of yesterday at $3,357 serves as the key bearish threshold. Similar to the bullish case, two consecutive 30-minute bars closing below $3,357 would confirm a bearish phase. In this scenario, the following downside targets apply:

1. $3,309 – Today’s VWAP, acting as the first potential support level.
2. $3,253.5 – Just above today’s VAH, offering a partial profit zone for shorts.
3. $3,234.5 – Slightly above the first lower standard deviation of today’s VWAP, a critical support area.
4. $3,159 – Just above the second lower standard deviation of today’s VWAP.
5. $3,084.5 – Positioned near the third lower standard deviation of today’s VWAP, this aligns with significant oversold levels.

Bearish traders should be cautious of temporary wicks below $3,357, as false breakdowns are common around dynamic support levels.

Recommendations for Traders

1. Bullish Strategy:

   • Wait for two consecutive 30-minute closes above $3,416 to confirm the breakout.
   • Use tight stop-loss orders just below the breakout level to manage risk.
   • Set partial profit targets at $3,492 and $3,533, holding for a potential extended move toward $3,610.

2. Bearish Strategy:

   • Wait for two consecutive 30-minute closes below $3,357 before initiating shorts.
   • Use stop-loss orders above the breakout zone to manage risk.
   • Scale out of positions at $3,309 and $3,253.5, holding for deeper targets near $3,159 and $3,084.5 if the selling pressure continues.

3. Neutral Zone:

   • Price action between $3,357 and $3,416 remains consolidative and indecisive. Traders are advised to avoid entering new positions within this range and instead wait for confirmation of direction.

Educational Note:

Value Areas and VWAP Bands are dynamic tools that recalibrate throughout the trading day.

• Value Area High/Low: These levels signify where 70% of trading volume occurred and act as dynamic thresholds for breakout and breakdown scenarios.
• VWAP and Standard Deviations: The VWAP provides a weighted average price, while its deviations identify areas of likely support and resistance. Breaking beyond these deviations often signals stronger directional moves.

Combining these tools with psychological round numbers like $3,400 and $3,600 enhances a trader’s ability to anticipate key inflection points.

Disclaimer:This analysis is for informational purposes only and does not constitute financial advice. Use it as a guide and trade at your own risk. Always have a clear risk management plan. Trade Ethereum at your own risk and visit ForexLive.com for additional views.

This article was written by Itai Levitan at www.forexlive.com.