Ethereum has entered its lowest volatility range in months, increasing market caution about its short-term direction.

On May 26 (local time), blockchain media outlet BeInCrypto said Ethereum last week fell below the lower boundary of an ascending parallel channel and the $2,140 0.236 Fibonacci retracement area in succession. The market is now watching whether the demand zone around $1,950 can hold.

The price is currently moving around $2,120. On short-term charts, trading has continued within a descending parallel channel since April 26, and recently it has tested the channel’s midline from below. If it breaks back above that area, some see room up to $2,230. The $2,230 level coincides with the upper boundary of the channel and is cited as a short-term resistance area.

Still, signals unfavorable for buyers remain. Trading volume has been shrinking during rebound attempts, and the relative strength index (RSI) is holding in neutral territory around 55. There have previously been cases in which rebounds failed to extend in this zone. If Ethereum closes below $2,080, the price could tilt back toward weakness near the lower end of the channel.

If the demand zone between $1,942 and $2,015 holds, a rebound scenario remains intact. Analyst Crypto Candy said Ethereum is attempting a rebound while holding above the daily demand zone in the $1,900s to $2,000 area, and viewed that as keeping open the possibility of $2,400 or higher as long as the zone holds. That outlook assumes buying flows into the area and prevents a daily close below $1,942.

If a clear rebound is confirmed in this area, Ethereum could also move back into the ascending channel it broke out of last week. Similar rebounds in the past have extended toward a target of $2,463. If the demand zone fails to hold, the bullish setup becomes invalid.

On a daily basis, conflicting signals are appearing at the same time. Ethereum has moved below the ascending parallel channel that had held since Feb. 7, and it has also broken the $2,140 support line. At the same time, the Bollinger Band width percentile has entered an extreme contraction zone. Such readings often tend to be followed by a large move in one direction, and it was presented as rare for them to persist for more than 2 weeks.

On the upside, $2,382, the 0.382 Fibonacci level, is cited as the next major resistance line. Above that, the golden ratio area at $2,772 is being discussed. On the downside, if $1,950 fails to hold, the $1,920 support line could be tested first. If weakness extends further, another scenario presented is that it could open the way down to around $1,750, near the February low.

Momentum indicators have not yet fully swung back to a clear buyer advantage. The RSI is rebounding from a bearish zone but is staying around 40, suggesting downward pressure remains. With volatility excessively compressed, the next 2 weeks are expected to be a turning point for the short-term trend. The early third-quarter trend could also change depending on which direction Ethereum breaks out first.