Ethereum's Expanding Diagonal Pattern and Its Implications for a Major Rally

Ethereum's price action in late 2025 has sparked intense debate among technical analysts, with many identifying a rare and historically significant Elliott Wave structure. According to recent analysis, Ethereum is currently navigating the final a-b-c phase of wave v within an expanding diagonal pattern, a configuration that could catalyze a sharp upward move toward $9,000–$18,000 if the pattern completes as expected. This development, combined with key Fibonacci retracement and extension levels, presents a compelling case for a major rally, though traders must remain vigilant about critical support and resistance zones.

The Expanding Diagonal: A Rare but Powerful Signal

An expanding diagonal is a less common variant of the Elliott Wave structure, characterized by diverging boundary lines that form a wedge with outward expansion. Unlike contracting diagonals, which are more typical in fifth-wave positions, expanding diagonals often signal the exhaustion of a larger trend and are frequently followed by sharp reversals. In Ethereum's case, the pattern has emerged during a prolonged bullish phase, with wave a breaking above the $3,650 resistance level and wave b consolidating within a key liquidity support zone as reported in the analysis. Analysts note that the pattern's "textbook" structure-marked by even spacing between major swings and a steady rhythm-aligns with historical turning points, such as those observed in the Fair Value Gap.

Wave V in Motion: Key Technical Levels

Ethereum's current position in wave v of the expanding diagonal places it in the final a-b-c subwave. Wave a has already achieved a critical breakout, while wave b is testing support levels at $2,852 and $2,945 as the pattern progresses. The immediate focus is on wave c, which could extend toward the $9,000–$18,000 range, as defined by the upper wedge line of the expanding diagonal. Fibonacci extensions further refine this target: a 118% extension from recent lows points to $6,802, a level reinforced by DeMarker oscillator signals and institutional money flow patterns.

Traders are also monitoring a broader rising wedge, with resistance clustered at $3,017–$3,050 and $3,373. A breakout above these levels could accelerate the wave c move, while a failure to hold key support zones-particularly the $2,700–$2,550 range-might trigger a retracement into wave b or even a deeper correction.

Historical Parallels and Institutional Confidence

The expanding diagonal's rarity in bullish contexts makes its appearance in Ethereum's chart particularly noteworthy. Analysts like Gert van Lagen have drawn parallels to historical bull markets, such as the 1980 Dow Jones Industrial Average surge, suggesting that Ethereum could replicate similar 245% gains if the pattern completes cleanly. This projection is further bolstered by the confluence of Fibonacci extensions, institutional buying pressure, and technical indicators that suggest a high probability of continuation.

Risks and Considerations

While the technical case for a rally is robust, investors must remain cautious. Expanding diagonals are inherently volatile, and wave c's trajectory could be disrupted by macroeconomic factors, regulatory shifts, or unexpected liquidity events. Additionally, the pattern's completion often precedes a sharp reversal, meaning that even if Ethereum reaches $18,000, a subsequent pullback into the $3,000–$4,000 range could follow.

Conclusion: Positioning for the Next Leg

Ethereum's expanding diagonal pattern represents a high-probability setup for a major rally, driven by precise Fibonacci targets and a well-defined Elliott Wave structure. For investors, the key is to balance optimism with risk management: entering long positions near confirmed support levels while using stop-loss orders to mitigate downside exposure. As the market approaches the final stages of wave v, the coming weeks will be critical in determining whether Ethereum can break through its upper wedge and cement its place in the next bull cycle.