The prices of Ethereum’s native token, Ether (ETH), could fall to a two-month low after it slid below support near $ 2,954, based on a classic trading pattern.
The $ 2,954 level represents the so-called neckline that constitutes a setup of head and shoulders. In detail, This level of support appears to be a three-peaked bottom, with the middle one (head) higher than the other two (shoulders).
A break below the $ 2,954 level signals a change in trend, suggesting that the ETH / USD pair may fall by a length equal to the distance between the peak of the head and the line of the neck.
Peter Brandt, CEO of global trading company Factor LLC, shared the bearish pattern late on September 20, pointing out that a successful break below $ 2,954 could drag prices down to close to $ 2,000.
“I am NOT saying believe in it, and I am saying that I am not into shorting, but like it or not, if you have ETH, you will have to deal with it. This possible head and shoulders exists, whether it completes, fails or is transform, it exists “.
Research conducted by Samurai Trading Academy notes that head and shoulder patterns hit their projected target almost 85% of the time.
Ether was trading at $ 2,805 at 00:22 UTC, its lowest level since August 7. However, the cryptocurrency later rebounded to hit an intraday high of $ 3,104 and was reeling around $ 3,000 as of press time.
The erratic price movements came as part of a corrective trend that began after the ETH / USD pair formed a local high of $ 4,030 on September 3. As a result, the pair initially fell 25.34% to hit $ 3,009. Subsequently, it rallied to $ 3,675.
However, the bulls lost control again earlier this week, as a sell-off caused by a tumult in China’s heavily indebted real estate sector affected both cryptocurrency and traditional markets.
Ether fell 10.58% on September 20.
Some analysts anticipated that ETH would rally again if its price remained above historical support levels. For example, the pseudonym chartist “PostyXBT” mentioned $ 2,850 as “a significant level” that kept the token’s bullish bias intact.
“Good to see ETH testing a key support level at the same time as BTC”, the tweeters pointed out.
“Like BTC near $ 40,000, $ 2,850 is an important level that needs to be sustained.”
PostyXBT’s chart setup predicted that the ETH / USD pair will hit $ 4,000 again in the next few trading days.
The Crypto Monk, another analyst with a pseudonym, added that The latest pullbacks drove out weak traders and presented opportunities for strong hands to buy and send Ether prices to a new all-time high.
Brandt also noted that the decline in the ETH / USD pair could lead to a possible “bearish trap”, a technical pattern that occurs when an asset’s price action wrongly signals the end of an uptrend. As a result, traders with leveraged short positions could suffer losses should ETH / USD spot prices rebound.
“I strongly suspect that recent weakness, especially overnight, has managed to wipe out weak longs and may have caught some bears,” Brandt wrote.
“Of course, subsequent price action would have to confirm that.”
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