Ethereum Native Token Ether (ETH) rates could fall to a two-month low after slipping below support at around $ 2,954, based on a classic trading pattern.
The $ 2,954 level represents a so-called neckline constituting a head and shoulders configuration. In detail, said support level appears to be a floor with three peaks, the middle one (HEAD) being higher than the other two (SHOULDERS).
A breach below the $ 2,954 level signals a trend reversal, suggesting that ETH / USD may fall by a length equal to the distance between the top of the head and the neck line.
Peter Brandt, CEO of global trading firm Factor LLC, shared the downtrend late on September 20, noting that a successful blackout below $ 2,954 could push prices down to around $ 2,000.
“I’m NOT saying I believe it, and I’m saying I’m not bypassing it – but whether you like it or not, if you have ETH you will have to deal with it. This possible S&S exists, that ‘it either ends, fails, or morphs, it exists. “
Research conducted by the Samurai Trading Academy indicates that the head and shoulders hit their projected target almost 85% of the time.
Ether was trading at $ 2,805 at 12:22 UTC, its lowest level since August 7. However, the cryptocurrency then recovered to an intraday high of $ 3,104 and was hovering around $ 3,000 at the time of writing.
The sawtooth price movements are part of a corrective trend that began after ETH / USD hit a session high of $ 4,030 on September 3. As a result, the pair initially fell 25.34% to $ 3,009. He then recovered up to $ 3,675.
Nonetheless, the bulls began to lose control again at the start of this week as a sell-off sparked by an uproar in China’s heavily leveraged real estate sector hit crypto and traditional markets.
Ether fell 10.58% on September 20.
Some analysts predict that the Ethereum token will recover again if its price holds above historical support levels. For example, the pseudonymous chartist PostyXBT noted $ 2,850 as a “significant level” which kept Ether’s bullish bias intact.
“It’s good to see ETH testing a key level of support alongside BTC,” the Twitterati noted.
“Similar to BTC at ~ $ 40,000, ~ $ 2,850 is an important level that must hold.”
PostyXBT’s chart setup was for ETH / USD to retest $ 4,000 over the next few sessions.
Crypto Monk, another pseudonymous analyst, added that the latest declines have knocked out weak traders and presented opportunities for strong hands to buy and send ether prices to a new all-time high.
Related: Bitcoin In ‘Good Shape’ As Long As BTC Price Stays Above $ 40,000 – Mike Novogratz
Brandt also noted that the decline in ETH / USD could lead to a potential “bear trap,” a technical pattern that occurs when an asset’s price performance falsely signals the end of an uptrend. As a result, traders with leveraged short positions could suffer losses if ETH / USD spot rates rebound.
“I strongly suspect that the recent weakness, especially overnight, has been successful in eliminating long weaknesses and may have trapped some bears,” Brandt wrote.
“Of course, further price action will have to confirm this.”
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