Source: time.com
Eth price is in danger of dropping further despite making a 20% rebound in the last few days. The price of the token seems ready to undergo a breakdown move in May having formed a convincing “bear peanut” structure.
Will Eth Price drop to $1,500?
Ethereum price has shown a significant increase in bearish volume, raising the idea of a $1,500 price target among crypto investors and experts. The bears have left a ramping pattern on the volume indicator, which could signal a further drop in ETH price. If the current technical indicators are correct, Ethereum may present an opportunity for crypto traders to take short positions.
Ethereum price has been inside a range defined by two converging trend lines since May 11. The sideways moves coincide with a decrease in trading volumes, meaning that the Eth/USD pair is not painting a bear pennant.
Bear pennants are simply bearish continuation patterns that resolve after the price breaks below the lower trend line of the structure and then fall by the same height as the height of the previous downside move (known as the flagpole).
Source: cointelegraph.com
Due to this technical rule, Ether is at the risk of closing below its pennant structure, and then additional moves to the downside will follow.
Eth’s flagpole has a height of around $650. Thus, if Ethereum price undergoes a breakdown at the apex point of the pennant near $2,030, the bearish target of the structure will be below $1,500. This will be a 25% drop from ETH price of May 15.
Selloff, Pullback
The profit target for the bear pennant falls into an area that preceded a 250% price rally during the February to November 2021 session. The price is also around Ether’s 200-day exponential moving average, currently near $1,600.
The demand zone may prompt ETH traders to hold their coins as they anticipate a sharp upside retracement.
If this happens, the interim profit target for ETH price will likely be the multi-month downward sloping trend line that has acted as the resistance line in a “Falling channel” pattern. The following chart demonstrates this:
Source: cointelegraph.com
Ethereum has been rebounding after testing the demand zone, and the lower trend line of the falling channel as support. This may push ETH/USD price to the upper trend line of the channel near $3,000, about 50% above ETH price of May 15, by June. This will be a 33% increase from the current Ethereum price.
Extended Breakdown Scenario
A worst-case scenario could occur if ETH price breaks below the demand zone, caused by macro risks and their effect on the cryptocurrency market in 2022.
Ethereum price has already declined by over 50% as cryptocurrency investors dump riskier assets such as Bitcoin and tech stocks in an environment where high-interest rates are being charged.
Traders also anticipate additional stock market selloffs, which could hurt cryptocurrency such as Ether, Cardano, Bitcoin, and others.
BOOX Research, who is a financial blogger at SeekingAlpha, maintains his long-term bullish position on Ether, Bitcoin, and the large crypto market but believes that it may take some time for the recovery to occur.
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