Ethereum just lost $ 2,954 Support increases likelihood of slipping towards $ 2k – is that totally pessimistic?
Ethereum could hit a two-month low after losing $ 2,954 support along a classic trading pattern.
$ 2,954 is the height representing the neckline that makes up the head and shoulders pattern. Specifically, it appears to be a support floor with three peaks, with the middle peak (head) being higher than the other two (shoulders).
Ether’s break below $ 2,954 signals a trend reversal, suggesting it could decrease by the distance between the top and the cutout.
Ether Price Chart Daily Frame Setup Head and Shoulders Pattern | Source: Peter Brandt
Peter Brandt, CEO of global trading firm Factor LLC, shared a bearish pattern on Sept. 20, noting that a loss of $ 2,954 could push ether to around $ 2,000.
“I’m not saying that I believe it, and I’m not trimming it either – but whether you like it or not, if you have ether, you have to deal with it. The potential head-and-shoulders pattern always exists, whether it is complete, failed or changed, it still exists. “
follow research The head and shoulders patterns created by Samurai Trading Academy are the most accurate of the price action patterns and achieve expected goals nearly 85% of the time.
On September 19, US Treasury Secretary Janet Yellen urged Congress to raise the US debt ceiling again in an article in the Wall Street Journal. Yellen suggests that this should reduce the risk of default and create a “massive economic catastrophe”.
One of the focal points for traditional markets is this week’s meeting of the Federal Open Market Committee, which ends on September 22nd. At the meeting, the US Federal Reserve (Fed) will set a date to cut its $ 120 billion monthly purchase program.
Although the current price has been near the lower end of its previous performance over the past 45 days, Ether is still up 210% in 2021. The Total Value (TVL) has grown from $ 13 billion in 2020 to $ 60 billion, and the and NFT sectors have seen an impressive surge while Ethereum maintained its market share dominance.
Although the average gas fee topped $ 20 in September, Ethereum still holds around 60% of the decentralized exchange volume (DEX). Its biggest competitor, Binance Smart Chain, has an average daily volume of less than $ 1 billion, even though transaction fees are under $ 0.4.
On the futures market, the quarterly ether futures contract is the preferred instrument of whales and arbitrage tables due to its settlement dates and the price difference to the spot market. The biggest advantage of the contract, however, is that the funding rate is not volatile.
These fixed rate contracts typically trade at a lower premium than the spot market, suggesting that sellers are charging more money to delay payments.
In healthy markets, futures should trade at an annual premium of 5% to 15%. This situation is technically defined as “contango” and is not exclusively limited to the cryptocurrency market.
Ether Futures annual premium for 3 months | Source: Laevitas
As shown above, the ether futures premium rose to 15% on September 6th as the spot price retested the $ 4,000 resistance level. In addition to that short-term forecast, the base fluctuated between 8% and 12% over the past month, which is considered healthy and bullish.
Just under $ 3,000 right now isn’t enough to put off seasoned traders. More importantly, SEC chairman Gary Gensler’s interview on crypto regulation also had no noticeable impact on the price of ether. If there is a general concern, the Ether Futures Premium should reflect it.
Prospect of price growth
Ether is trading at $ 2,865 at press time, its lowest level since August.
Ether price chart | Source: Tradingview
The up and down movements in price were part of a corrective trend that began after Ether hit a local high of $ 4,030 on September 3. As a result, it fell 25.34% to $ 3,009. It then rallied back to $ 3,675.
However, the bulls lost control earlier this week when a wave of sell-offs sparked by the Evergrande debt bomb from China hit both the crypto space and traditional markets.
Some analysts have pointed to the potential impact if Chinese real estate giant Evergrande defaults. In contrast, others blamed the ongoing debates over the debt ceiling in Washington as the catalyst for this week’s volatility. As a result, the CBOE Volatility Index (VIX), commonly known as the “Stock Market Fear Index,” has risen more than 30%, to its highest level since May.
Some analysts predict that ether will rebound if its price holds above historical support. For example, analyst PostyXBT mentioned that $ 2,850 would be a “critical level” to keep Ether bullish.
“It’s great to see Ether re-testing key support at the same time as BTC. Similar to Bitcoin’s $ 40,000, $ 2,850 is the critical level that ETH must maintain. “
$ ETH 1W
Similar to BTC at ~ $ 40,000, ~ $ 2850 is an important level to hold. pic.twitter.com/ehTUYRU6o4
– PostyNFT (@PostyXBT) September 21, 2021
Analyst “Crypto Monk” added that the recent decline has pushed back weak traders and gives hard hitters an opportunity to buy into and invest Ether price to a new all-time high (ATH).
Brandt also noted that a decline in ether could create a possible “bear trap,” a technical pattern that occurs when asset price falsely signals the end of an uptrend. Therefore, traders with leveraged short positions could suffer losses if the price of Ether in the spot market rebounds.
“I very much doubt that the recent correction, particularly overnight, has successfully erased weak longs and possibly fallen into a bear trap. Of course, further price movements must confirm this. “
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Disclaimer: This article is for informational purposes only, not investment advice. Investors should research carefully before making a decision. We are not responsible for your investment decisions.
According to AZcoin News