Ethereum price action was bullish on Monday and Tuesday, whereby the hurdle at $2,650 was tested but not broken. A correction occurred on Wednesday with Ether diving under last week’s key support at $2,400. A weekly low has been traded at $2,350, allowing bulls to attempt another shot at sustaining the uptrend.
At the time of writing, ETH is trading at $2430 amid a gradual recovery action. It is essential to realize that the pioneer token is dancing within the confines of a descending triangle. If this pattern matures, Ethereum may dive massively, exploring levels significantly under $2,000.
Is Ethereum heading for another downfall?
The descending triangle is a bearish formation in technical analysis and mainly occurs within a downtrend as a continuation pattern. A couple or more relatively equal lows form the horizontal (x-axis) support while a descending trendline is drawn along with the lower highs.
As the pattern develops, volume tends to contract but increases drastically when the x-axis is broken. The volume is a key for the confirmation of the downtrend. A massive dip is expected after the price slides under the price. Note that triangles tend to have exact breakout targets, determined by measuring the distance between the widest points, as illustrated.
ETH/USD four-hour chart
Therefore, if the descending triangle breakout materializes, Ethereum price may dip significantly under $2,000. Realize that a 27% drop under the breakout point will see Ether falling to $1,650.
Ethereum has already reclaimed support at $2,400, and bulls are again working on a recovery action on the flipside. If the uptrend makes it above the descending trendline, the downtrend will be sabotaged in favor of stretching the bullish leg above $3,000.
Ethereum price intraday levels
Spot rate: $2,430
Trend: Short-term bullish bias
Resistance: The 50 SMA, $2,650
Support: $2,400, $2,100 and $1,750