Ethereum’s head-and-shoulders chart pattern carries the risk of the ETH price dropping to $ 2

Ethereum’s native token ratio (ETH) could drop to a two-month low after falling below the support of around $ 2,954 based on a classic trading pattern.

The USD 2,954 level represents the so-called cutout, which forms a head-and-shoulder setup. In particular, this support appears to be a three-peak bottom, with the middle peak (HEAD) being higher than the other two (SHOULD).

A break below USD 2,954 signals a trend reversal, suggesting that ETH / USD could fall a length equal to the distance between the top and the neckline.

Peter Brandt, CEO of global trading firm Factor LLC, shared a bearish pattern late Monday, noting that a successful break below $ 2,954 could push the price down to $ 2,000.

“I am NOT saying that I believe it and I am saying that I am not shortening it – but whether you like it or not, when you own ETH you have to put up with it. or metamorphosis, it exists. “

Research by the Samurai Trade Academy has shown that the head and shoulders hit the intended target nearly 85% of the time.

Optimistic outlook

Ether was trading at $ 2,805 at 12:22 UTC, its lowest level since August 7th. However, the cryptocurrency later rallied to an intraday high of $ 3,104, hovering around $ 3,000 at press time.

The volatile price action was part of a corrective trend that began after ETH / USD hit a high of $ 4,030 on September 3rd. It then rallied back to $ 3,675.

However, the bulls began to lose control earlier this week when a sell-off caused by tumult in China’s highly indebted real estate sector hit the money, electronic and traditional markets.

Ether was down 10.58% on Monday.

Some analysts predict that the Ethereum token will rebound if its price is above historical support. For example, the seducer is nicknamed PostyXBT mention $ 2,850 is the “critical level” that Ether keeps bullish.

Twitterati notes: “It’s great to see ETH testing an important level of support at the same time as BTC.”

“Similar to BTC at ~ $ 40,000, ~ $ 2850 is an important level to maintain.”

PostyXBT’s chart setup stipulates that ETH / USD will retest USD 4,000 in the coming sessions.

The Crypto Monk, another alias analyst, Add that the recent declines pushed back weak traders and gave the strong the opportunity to buy the price of ether and push it to new all-time highs.

Related: Bitcoin in “good standing” as long as BTC price stays above $ 40,000 – Mike Novogratz

Brandt also noted that a decline in ETH / USD could create a potential “bear trap,” a technical pattern that occurs when the price action of an asset falsely signals the end of an uptrend. Therefore, traders with leveraged short positions could suffer losses if the spot ETH / USD rate rebounds.

“I strongly suspect that the recent weakness, particularly overnight, has successfully washed out the weak longs and possibly caught some bears,” Brandt wrote.

“Of course, further price promotions have to confirm this.”