A series of back-to-backup side rejections at a local top puts Ethereum at risk of correcting lower to $ 350.
Looking at the ETH / USD 1H chart, it shows the pair is attempting to close above USD 384, a resistance target that has been extremely bullish biased in the past. It continues to defend bears as Ethereum traders repeatedly fail to push the above prices leading to the formation of multiple long fuses upwards.
ETHUSD trades near the interim resistance area of $384-390. Source: TradingView.com
Technically, they represent rejected peaks – even hard-core attempts to move ETHUSD above USD 384 meet with equally strong selling pressure.
That gives traders the option to either keep testing the level for a breakout move as they accumulate more accumulators at the local support level ($ 375), or give up the area altogether to find serious buyers at further lower levels.
As seen in the chart above, Ethereum is technically trading in an ascending triangle. A horizontal line / area in purple in combination with a rising trendline with more than two higher lows testify to the technical pattern.
An Ascending Triangle is a continuation signal, which means that traders expect it to push the price in the direction of its previous trend. Once the breakout occurs, they open buy or sell positions depending on the direction of the price movement. The length of the escape, meanwhile, is typically the same as the maximum height of the triangle.
Example of Ascending Triangle breakout in a downtrend. Source: Investopedia
Ethereum is more likely to break down as the trend was bearish prior to the formation of the Ascending Triangle. Should that happen, the cryptocurrency will pull back after failing to move above the USD 384-390 resistance area to retest the rising trendline (green) as support.
That price floor is currently near USD 350, a psychological level for the next potential rebound.
Nevertheless, a negative breakout will occur if the Ethereum price falls below the green trend line. That would mean an extended downward move – about $ 67 based on the triangle’s maximum height. Overall, ETH / USD is likely to fall to $ 283 if the bearish pattern remains valid.
Ethereum bullish scenario
Conversely, if Ethereum manages to break above the USD 384-390 range, it would see extended upward momentum towards USD 450 or higher. That would also mean a break in the trend. It means that ETH / USD could pursue further upward targets by flipping $ 384-390 from resistance territory to support.
“Ethereum is essentially caught between two major quarterly levels of $ 360 and $ 391,” said one analyst. The quarterly candle closes in less than two weeks. A close above USD 360 could be enough to maintain ETH’s bullish momentum and avoid the further downside. “
The ETH / USD was up 4.45 percent before Thursday’s New York trading session.