Ethereum at risk of 25% crash as ETH price forms classic bearish technical pattern

Ethereum’s native token, Ether (Ethereum) looks poised to experience a breakdown in May as it forms a convincing “bear flag” structure.

ETH price rises to $1,500?

The price of ETH is consolidate Since May 11, within the range defined by two converging trend lines. Its sideways movement coincided with a drop in volume, highlighting the possibility that ETH/USD is drawing a bear flag.

bear flag are bearish continuation patterns, which means they resolve after the price breaks below the lower trendline of the structure and then falls as much as the height of the previous drop (called the flagpole).

ETH/USD two-hour price chart. Source: TradingView

Due to this technical rule, Ether is at risk of closing below its pennant structure, followed by further downside.

The height of the ETH flagpole is around $650. Therefore, if prices fail at the top of the pennant near $2,030, the structure would have a bearish target below $1,500, a drop of more than 25% from today’s price.

sell off, pull back

Interestingly, Bear Flag’s profit target falls on before the price rises by 250% At the February-November 2021 meeting. Additionally, targets are around ETH’s 200-week exponential moving average (200-day EMA; blue wave), currently near $1,600.

Ideally, the demand zone could prompt Ether traders Accumulate tokens Expect a sharp upward pullback.

Assuming this happens, ETH’s price medium-term profit target is likely to be a multi-month downward sloping trendline that acts as resistance in a “Descending Channel” pattern, as shown in the chart below.

ETH/USD weekly price chart. Source: TradingView

ETH has started to rally after testing the demand zone (and the lower trendline of the descending channel) as support. This could propel ETH/USD to the upper trendline of the channel in June, near $3,000, about 50% above today’s price.

Extended Failure Scenario

The worst-case scenario could be ETH falling below the demand zone, which is mostly a macro risk and its impact on the crypto market so far in 2022.

related: Crypto Risk of $1.9T Disappears, Spreads to Stocks, Bonds – Stablecoin Tether Becomes the Focus

Notably, ether is down more than 50% so far this quarter as investors reduce their exposure to riskier assets including bitcoin (bitcoin) and tech stocks, in a higher interest rate environment.

As owned by Cointelegraph reportexpectations of a further stock market sell-off could put pressure on cryptocurrencies, hurting Ethereum, Bitcoin, Cardano (ADA) and others in tandem.

Ethereum has a 0.90 correlation with the tech-heavy Nasdaq 100. Source: TradingView

SeekingAlpha’s financial blogger BOOX Research remains long-term bullish on bitcoin, ethereum and the broader crypto market, but thinks the recovery could take years.taken from it notes:

“While some corrections at the top may just be getting rid of ‘hot money,’ there is still a possibility of a deteriorating macro environment opening the door for bigger losses.”

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