Ethereum's price has seen a 0.89% rise over the past hour, bringing it to $1,870.56. This comes after a 2.49% drop in price over the previous 24 hours. The recent volatility leaves Ethereum down just 0.63% for the week, but still up 17.03% over the past month.

With a market capitalization of $226.07 billion, Ethereum remains the second largest cryptocurrency behind Bitcoin. Over $3.80 billion worth of ETH trading volume indicates significant liquidity is available in the market.

What's Driving the Ongoing Volatility?

Like most cryptocurrencies, Ethereum has experienced heightened volatility throughout 2022. Macroeconomic conditions weighing on risk assets have been a major factor. But Ethereum has also seen unique drivers of price action.

The ongoing transition to a proof-of-stake consensus mechanism via the Merge upgrade has caused uncertainty. Success would boost Ethereum's scalability, security and sustainability. But delays have dampened sentiment.

At the same time, enthusiasm around the booming DeFi ecosystem and NFT volumes have periodically boosted Ethereum. This underpins its long term value proposition even amid short term volatility.

Understanding these key narratives can help traders distinguish signal from noise when evaluating Ethereum price movements.

How Do the Technicals Look on the Charts?

Looking at the weekly chart offers some clues on where Ethereum may head next. The major theme has been a steady downtrend since the November 2021 all time high near $4,900. However, this downtrend appears to be weakening.

The weekly candle currently has a long lower wick, indicating strong bounce support above $1,700. This aligns closely with the 50 week moving average, which has been a crucial support level all year.

The weekly RSI reading has also risen from oversold levels below 30 back up over 40. This signals bearish momentum is easing and buyers have begun stepping in.

On shorter timeframes, the recent support bounce from $1,700 occurred right at the 0.618 Fibonacci level. This is a widely followed retracement indicator, adding to the significance of this level.

For resistance, the psychological $2,000 and $2,500 levels are ones to watch. Breakouts past these could signal a macro trend change.

Should Traders Buy This Dip in Ethereum?

The data suggests Ethereum remains in a weekly downtrend, but that bearish momentum is fading. This can help inform whether buying the current dip makes sense.

The major support at $1,700 held firmly, indicating buyers are willing to step up at those levels. For traders, buying on pullbacks to this area may offer a good risk/reward scenario.

Investors may also find Ethereum attractive around current levels for longer-term holds. But scaling in on major weakness down towards the 2022 lows near $1,000 may make more sense. This reduces exposure risk if downside momentum persists.

In the near term, significant overhead resistance remains. It will be difficult for Ethereum to break above $2,000 - $2,500 without improved sentiment. Traders should wait for these breakouts before going aggressively long.

When Can We Expect the Next Major ETH Rally?

Given the still-intact downtrend, the key question becomes when Ethereum might see a sustainable turnaround. The weekly data offers some insights.

Historically, each of Ethereum's macro bear trends have seen a maximum drawdown between -80% and -85% from the all time high. With the current retracement around -75%, more downside could occur before the bottom is in.

However, the recent divergence of strong support on the charts indicates bears may be losing control. This lines up historically with late-stage capitulation. Often the final washout exhaustion spike precedes the end of the bear phase.

This data suggests patience and discipline could soon be rewarded. The confluence of capitulation signs indicates Ethereum may turn the corner in 2023. Traders and investors positioning in the current support zone are poised to ride the next bull wave.

What Strategy Aligns Best With the Data?

Given these insights from the dataset, certain strategies emerge that traders and investors may want to follow.

First, avoid trying to catch falling knives during temporary bounces. Allow Ethereum time to base before going long at resistance. Buying overheated rallies likely leads to being stopped out.

Second, monitor key support at $1,700 closely. This area offers the optimal long entry for short term trades. Investors may also nibble here, but can wait for lower prices.

Finally, exercise patience for signals of a macro bottom. Capitulation often occurs quickly after a long downtrend. Be ready to act once the market confirms exhausted sellers. This could set up for big gains during the next cyclical Ethereum bull run.

In summary, the data suggests prudent traders should wait for clear support bounces and investors can begin scaling in. Maintaining this composed approach will allow taking full advantage of Ethereum's future upside potential.