Ethereum’s own token ETH was down more than 20 percent from its session high of $ 1,350 on profit taking. While technical indicators point to a further lower correction, one analyst believes the second-largest cryptocurrency could hit its all-time highs in the coming sessions.
The pseudonymous entity rested his bullish setup on one condition: that the ETH / USD exchange rate first exceeds the $ 1,116 – $ 1,140 range. Only then would the pair be able to confirm an extended rebound to $ 1,420, its all-time high in January 2018.
Ethereum trade setup, as presented by KongBTC. Source: ETHUSD on TradingView.com
ETH / USD formed a local support level near USD 1,000 ahead of Monday’s US trading session. The pair experienced a downturn, albeit meager trading volumes, suggesting that traders might want to sell the Ethereum token further. In the meantime, it turned out ETH / USD’s ability to register a full-fledged retracement is close to $ 919.
That’s because of a technical indicator known as the Rising Wedge. In retrospect, it is a bearish reversal pattern that occurs when an asset travels upward and leaves a series of higher peaks and troughs. Eventually the price breaks down from the pattern and falls to as low as the maximum wedge height.
Ethereum Rising Wedge setup sets breakout target near $919. Source: ETHUSD on TradingView.com
Ethereum formed a similar wedge when it jumped from $ 924 to $ 1,420 in the first week of January. Meanwhile, the cryptocurrency broke out of the pattern around 0000 GMT on Monday, accompanied by a spike in volumes. That increased the possibility of hitting the Wedge goal close to $ 919.
ETH Pitchfork pattern
More bearish warnings came from Josh Olszewicz, an independent cryptocurrency market analyst. The Chartist marked his go-to pitchfork pattern, showing that Ethereum may have surpassed its recent high. That pointed to an extensive downward correction for ETH / USD.
“[The pair] looks for a dive in [middle line], 200 days EMA, and turning ~ 500-530 annually over the next few months, ”said Mr Olszewicz.
Ethereum Pitchfork setup sets the downside target near $500. Source: ETHUSD on TradingView.com
The bearish analogies appeared despite a growing bullish bias for the cryptocurrency industry as a whole.
With US President-elect Joe Biden confirming that his government would expand their size coronavirus incentive package at trillions of dollars, traders expect the US dollar to lose value further. As a result, safe-haven assets such as gold and Bitcoin would continue their upward trend.
Ethereum, which correlated positively with the Bitcoin market, expects to rise higher next to the best cryptocurrency.