Ethereum (ETH) threatens to dip below $ 3,200 in the upcoming sessions as its rally hits hard resistance area.
In particular, ETH gained almost 22% in the monthly timeframe after the market-wide bull run. The price moved from under $ 3,000 to over $ 3,650 in the first eight days of October, sparking further bullish forecasts.
“$ 6k is coming soon; $ 10,000 programmed, ”noted trader Crypto Cactus. David Gokhshtein, CEO of the distributed data network PAC Protocol, also suspect $ 10,000 increase target for Ether.
However, at the moment there are three notable bearish indicators that could limit ETH’s uptrend.
Two resistance zones and a rising wedge
The three indicators that can cause Ether to bearish reversal are a rising wedge, a falling trendline resistance, and a transient resistance bar, as shown in the graph below.
4H ETH / USD chart with declining confluence. Source: TradingView
A rising wedge occurs as ETH rebounds, leaving a series of higher highs and lower lows. Meanwhile, the uptrend in cryptocurrency occurs with decreasing volume, showing a lack of confidence in traders’ bullish momentum.
Additionally, the top of the structure – the point where the two trendlines converge – is around two historical areas of resistance. The first is a temporary resistance bar, as shown in the graph above, which previously identified a top for ETH above $ 3,650.
At the same time, the second resistance is the descending trendline, which is more visible on the lower daily chart at around USD 3,800.
The ETH / USD 1D chart shows the resistance of the descending trend line. Source: TradingView
Therefore, the top of the rising wedge and two resistance trend lines represent a downside risk for Ether. In this case, ETH collapses to the maximum height between the upper and lower trend lines of the wedge.
The end result will be a drop to $ 3,200, which will act as an accumulation zone for Ethereum traders in the first half of September 2021.
Activation of an inverse head-and-shoulders pattern?
A drop to or below $ 3,200 doesn’t necessarily drive ETH into a full-blown bearish cycle. Conversely, it could trigger a bullish inverse head-and-shoulder setup.
The 4H ETH / USD chart exhibits a potentially inverse head and shoulders pattern. Source: TradingView
If setup goes as expected, traders will pile up near $ 3,200 and the price will rebound towards the cutout in the chart above. Once there, the target price would be the length of the maximum distance between the neckline and the bottom of the pattern and would set Ether on its way to a new all-time high of around $ 4,500.
Join Bitcoin Magazine Telegram to keep track of news and comment on this article: https://t.me/coincunews
According to Cointelegraph