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An analyst has explained how Ethereum (ETH) could see its price crash to $1,700 if the support level of this technical analysis (TA) pattern fails.
Ethereum Could Be In Danger Of Falling Under Ascending Channel Support
In a new post on X, analyst Ali Martinez has discussed about where Ethereum could head next based on a pattern forming in its 12-hour price chart. The pattern in question is an Ascending Parallel Channel from TA, which, as its name implies, involves two parallel trendlines that are sloped upwards.
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When the asset is inside this channel, it goes through consolidation towards a net upside. The higher tops in its price trace the upper line of the pattern, while the higher lows draw the lower level.
Like other TA patterns, the former line is assumed to act as a source of resistance in the near future and the latter as a point of support. Breaks out of either of these boundaries can imply a continuation of trend in that direction.
The Ascending Parallel Channel isn’t the only parallel channel in TA. When parallel consolidation happens towards the downside instead, the formation is known as a Descending Parallel Channel. Neither of these are the most commonly observed type, though, as that title is held by the basic Parallel Channel, which has its trendlines parallel to the time-axis (that is, they have zero slope).
Now, here is the chart shared by the analyst that shows the Ascending Channel that the 12-hour price of Ethereum has been trading inside for the last few years:
From the graph, it’s apparent that the Ethereum half-day price saw a very brief retest of the Ascending Channel’s lower level recently. The coin found support then, but its value is still floating quite close to the line, meaning that another retest could potentially happen soon. The level is currently situated at $2,500.
During the last few years, this line has continuously held for the cryptocurrency, so it’s possible that it may do so again in the near future. “If Ethereum $ETH holds above $2,500, it could rebound toward $4,000 or even $6,000,” notes Martinez.
The former target is around halfway through the channel from the current mark, while the latter corresponds to the upper level. The last time that ETH topped out was near the former line.
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“However, if $2,500 fails as support, the next target shifts to $1,700!” warns the analyst. From the current price of the coin, a crash to this target would mean a decrease of more than 39%.
It now remains to be seen whether Ethereum will retest the lower level of the Ascending Channel again in the coming days or not.
ETH Price
At the time of writing, Ethereum is floating around $2,800, down more than 6% over the last seven days.
Featured image from Dall-E, charts from TradingView.com
Credit: Source link
