Ethereum price threatens to lose $ 4,000 on fear of “rising wedge” breakout
The November 16 sell-off of Ether (ETH) increased the likelihood that the ETH price will drop below $ 4,000.
ETH fell 10% to around $ 4,100 on Tuesday amid a correction led by Bitcoin (BTC). Ether fell below the support of the uptrend line in the fourth quarter.
ETH / USD also tested the 50-day exponential moving average (a velvety 50-day EMA in the graph above) as the new floor before moving up. The next support to watch if the 50-day EMA breaks is around $ 3,700.
Many rejections before us?
A rising trendline emerged as part of a rising wedge, a technical pattern that many analysts view as a bearish reversal signal. It occurs when the price fluctuates in an area defined by two converging upward trend lines.
Meanwhile, analysts confirm a wedge breakout if price breaks below the lower trendline and is accompanied by a surge in trading volume. They often keep an eye on the level of a downtrend that corresponds to the greatest distance between Wedge’s trendlines.
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Hence, based on the climbing wedge setup, Ether is likely to drop below $ 3,000. There is a chance, however.
Retest resistance ascending triangle for support
The ascending triangle, which brings Ether to around $ 6,500 by the end of 2021, offsets the bearish reversal caused by the growing wedge structure
The bullish setup appeared when ETH price retested the triangle’s resistance during the support days after breaking above it. Such a move usually removes the weak parties from the market and creates an opportunity for traders / investors with a long-term bullish outlook based on the asset’s strong fundamentals.
As a result, Ether’s recent pullback is likely to dry up once ETH price hits the triangular resistance below $ 4,000 – which is also the bottom trendline of the soaring wedge. If a rebound follows, the price can rebound towards $ 6,500.