Ethereum dropped through $1,220 during the New York session on Wednesday. Most risky assets were under pressure after the Fed raised an interest rate by 75 bps to tame inflation. Fundamentals might affect a short-term price action but technically, charts are still indicating a long-awaited bullish reversal to resume from here.
Ethereum has completed three waves between $2,031 and $1,220 as seen on the 4H chart here. The above drop seems corrective and is bouncing off the Fibonacci 0.618 retracement of the early rally between $800 and $2,031 as seen on the 4H chart here. If the above structure holds well, the bulls will be back in control soon.
Also, note that the RSI has produced a bullish divergence as prices dropped to a fresh swing low at $1,220. A combination of a bullish divergence, the past resistance-turned-support zone and the Fibonacci 0.618 bounce offers a highly probable set-up. A push above $1,412 will confirm a meaningful low in place and the bulls are back in control.
Potential rally through $1,800 against $900