Ethereum (ETH) faces a bearish breakout, potentially declining 45% to $998 after breaking key support at $1,639. Bullish RSI divergence suggests a possible short-term rally if $1,639 becomes support
Key Takeaways:
- Ethereum (ETH) breaks multi-month ascending triangle pattern, raising concerns.
- The cryptocurrency is currently testing the critical $1,639 resistance level, a year-long pivotal point.
- A theoretical forecasting method suggests a 45% decline for ETH following the bearish breakout.
- Despite the bearish sentiment, a bullish divergence on the RSI hints at potential upside.
Ethereum (ETH) has long been consolidating, forming a bullish setup over the past year. However, recent events have triggered a bearish breakout, casting uncertainty over its future trajectory.
While the prevailing evidence appears to favor sellers, there remains a window of opportunity for buyers to regain control.
Ethereum Fear and Greed Index is 58 — Greed
Current price: $1,604 pic.twitter.com/lii5jdvctl— Ethereum Fear and Greed Index (@EthereumFear) October 21, 2023
Ethereum Price at a Crossroads
For months, Ethereum’s price exhibited a pattern of four higher lows and three equal highs since May 2022, forming an ascending triangle.
Typically, such a technical formation suggests an impending uptrend equal to the distance between the first swing high and low.
However, in an unexpected turn of events, the breakout for Ethereum was bearish, projecting a potential 45% drop to $998. This target is calculated by adding the aforementioned distance to the breakout point at $1,825.
During its descent, Ethereum has already breached the critical $1,639 support level, which had served as a significant barrier for the past year.
If buyers fail to overcome this hurdle, the cryptocurrency is likely to continue its downward trajectory, possibly reaching the psychological level of $1,000. From its current position at $1,598, this descent would constitute a 38% decline.
Bullish Divergence Signals Hope
In contrast, Ethereum’s recent price action has seen the formation of three distinctive higher lows over the past month. Interestingly, this trend is not confirmed by the Relative Strength Index (RSI), a phenomenon known as bullish divergence.
Such divergences often precede minor rallies to the upsides.
Concluding Thoughts
The Ethereum market is currently at a critical juncture, with both bearish and bullish factors in play. The 45% potential drop is a concerning scenario for ETH holders, especially after the breach of the $1,639 support level.
However, the bullish divergence on the RSI offers a glimmer of hope for buyers, suggesting the possibility of a short-term rally if the $1,639 level can be reclaimed as support.
In the coming days, it will be crucial to monitor whether Ethereum can consolidate above this key resistance-turned-support level. If so, it may attract sidelined buyers and lead to a retest of the next significant resistance levels at $1,767 and $2,000.
Ethereum’s price movement in the near future will undoubtedly be closely watched by both traders and enthusiasts in the crypto community.
