Ethereum 'head & shoulders' chart pattern puts ETH price at risk of dropping to $2K

Published at: Sept. 21, 2021

Ethereum's native token Ether (ETH) rates may fall to a two-month low after it slid below support at around $2,954, based on a classic trading pattern.

The $2,954 level represents a so-called neckline constituting a head and shoulders setup. In detail, the said support level appears to be a floor to three peaks, with the middle one (HEAD) higher than the other two (SHOULDERS).

A breach below the $2,954 level signals a trend reversal, suggesting that ETH/USD may fall by a length equal to the distance between the head's peak and neckline.

Peter Brandt, CEO of global trading firm Factor LLC, shared the bearish pattern late on Sept. 20, noting that a successful breakdown below $2,954 could crash prices to around $2,000.

"I am NOT saying I believe it, and I am saying I am not shorting it — but like it or not, if you own ETH, you will have to deal with it. This possible H&S exists, whether it is completed, fails, or morphs, it exists."

Research conducted by Samurai Trading Academy notes that head and shoulders reach their projected target almost 85% of the time.

Bullish outlook

Ether traded at $2,805 as of 00:22 UTC, its lowest level since Aug 7. However, the cryptocurrency later recovered to reach an intraday high of $3,104 and was wobbling around $3,000 at the time of writing.

The seesaw price moves came as a part of a correction trend that started after ETH/USD formed a sessional top at $4,030 on Sept 3. As a result, the pair initially fell by as much as 25.34% to hit $3,009. It then recovered back to as high as $3,675. 

Nonetheless, bulls started losing control all over again at the beginning of this week as a wave of selling triggered by a tumult in China's heavily indebted property sector hit crypto and traditional markets alike.

Ether dropped by 10.58% on Sept. 20.

Some analysts anticipate that the Ethereum token would recover again if its price held above historic support levels. For instance, pseudonymous chartist PostyXBT mentioned $2,850 as "an important level" that kept Ether's bullish bias intact.

"Good to see ETH testing a key level of support at the same time as BTC," the Twitterati noted.

"Similar to BTC at ~$40k, ~$2850 is an important level that must hold."

PostyXBT's chart setup envisioned ETH/USD to retest $4,000 in the coming sessions.

The Crypto Monk, another pseudonymous analyst, added that the latest declines flushed out weak traders and presented opportunities for strong hands to buy and send the Ether prices to a new all-time high.

Related: Bitcoin in ‘good shape’ as long as BTC price stays above $40K — Mike Novogratz

Brandt also noted that ETH/USD's drop might lead to a potential "bear trap," a technical pattern that occurs when an asset's price performance incorrectly signals an end of a bullish trend. As a result, traders with leveraged short positions could suffer losses should the spot ETH/USD rates rebound.

"I have a strong suspicion that recent weakness, especially overnight, successfully washed out weak longs and might have trapped some bears," Brandt wrote.

"Of course, subsequent price action would need to confirm this."

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

Tags
Related Posts
Ethereum forming a double top? ETH price loses 12.5% amid Evergrande contagion fears
Prices of Ethereum's native asset, Ether (ETH), slumped on Sept. 20 amid a broad sell-off in the cryptocurrency market, led by worries about a potential housing bubble crisis brewing in China. The ETH/USD exchange rate dropped as much as 12.52% to $2,911 on the Coinbase exchange, hitting its lowest levels since the beginning of August. Elsewhere in the crypto market, Bitcoin (BTC), Binance Coin (BNB), Cardano (ADA), Solana (SOL) and other top tokens plunged in tandem. The drop imitated the mood in the broader market as United States equities plunged following a day of red in both the Asia-Pacific and …
Markets / Sept. 20, 2021
This Ethereum price chart pattern suggests ETH can reach $6.5K in Q4
Ethereum's native token Ether (ETH) has rallied by more than 415% this year to over $3,800, and two major bullish patterns developing on its charts highlight the scope for another upside move, ultimately toward the $6,200–$6,500 price range. ETH price eyes $4K resistance breakout The first decisive break above the psychological $4,000-mark, which serves as a resistance trendline to a five-month-old ascending triangle and a cup and handle pattern, could trigger a textbook price rally in the coming sessions. In detail, the $6,250-level appears as the profit target for the Ascending Triangle pattern, calculated by measuring the widest distance between …
Bitcoin Price / Oct. 18, 2021
Ethereum loses key support level as ETH price falls to two-month lows against Bitcoin
Ethereum’s native token, Ether (ETH), rallied by more than 15% in the first 12 days of October. But, compared to Bitcoin’s (BTC) 30% gains in the same period, the second-largest cryptocurrency is currently in a downtrend when priced in BTC. So far into October (and the fourth quarter of 2021), the ETH/BTC exchange rate has plunged by over 12%, reaching 0.060215 BTC for the first time in more than two months on Oct. 12. The drop also pushed ETH/BTC below one of its longest-standing support zones, the 200-day exponential moving average (200-day EMA; the orange wave), as shown in the …
Etf / Oct. 12, 2021
Ethereum price poised for 40% rally vs. Bitcoin after breaking out of four-month range
Ethereum's native token, Ether (ETH), has the prospect of logging a 40% price rally against its top rival, Bitcoin (BTC), per a classic technical pattern. Dubbed a "symmetrical triangle," the structure develops after the price forms a series of higher lows and lower highs. Doing so results in a convergence of two trendlines with a degree of symmetry, which appears a a triangle. Analysts treat symmetrical triangles as trend continuation indicators — i.e., they usually send prices in the direction of their previous trend following a clear breakout. As a result, the ongoing ETH/BTC price boom could undergo an upside …
Bitcoin Price / Aug. 31, 2021
Ethereum bulls retain hopes of $10K despite ETH price chart bear flag
Ethereum's native token Ether (ETH) looks poised to extend its selloff this week as it wobbles near a key support level of $4,000. ETH price dropped by over 5.50% on Dec. 6 to an intraday low at $3,913. In doing so, it slipped through upward sloping support that constituted an Ascending Channel that — more or less — appears like a Bear Flag, a bearish continuation setup. Conservative traders typically spot Bear Flags when an instrument consolidates higher inside a parallel channel after a considerable price drop (called Flagpole). They anticipate the price to break below the Flag's lower trendline. …
Bitcoin Price / Dec. 6, 2021