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Following Monday’s decline, Ethereum (ETH) fell below a key support level and hit its lowest price since November. Nonetheless, several market observers remain optimistic and are predicting a massive rebound for cryptocurrencies this quarter.
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Ethereum falls to 2-month low
Ethereum started the week with a significant correction, falling from its weekend range to its lowest price in two months. Over the weekend, Ethereum hovered between $3,200 and $3,340 after recovering from last week’s lows.
Amid this performance, cryptocurrency analyst Ali Martinez pointed out that ETH’s most important resistance is between $3,360 and $3,450, with 4.37 million addresses purchasing 6.47 million ETH. The analyst also noted that the cryptocurrency’s main support price was between $3,066 and $3,160, with 4.12 million addresses purchasing 4.9 million ETH.
Ethereum tested this support zone during the December correction, and bounced out of the zone following the pullback. However, the king of altcoins fell below this key support for the first time since November 9, hitting $2,920 on Monday.
After retracing 12% from the weekend high, ETH tested the post-election breakout level, confirming the $2,900 price range as support. Ethereum quickly rebounded from this level, surging 9% into the $3,100-$3,200 range.
Crypto investor Miky Bull believes ETH’s recent performance is “the perfect setup for a massive reversal.” The trader noted that this could be a reversal out of Ethereum’s inverted head and shoulders pattern.
The second-largest cryptocurrency by market capitalization has been forming an inverted head and shoulders pattern for several months, with the left shoulder forming around the $2,800 price range, as pointed out by several analysts.
Rekt Capital suggested that “a decline closer to the $3,000 level could see Ethereum develop into a right shoulder.” Meanwhile, Miky Bull said his bullish setup targets $7,000.
ETH has a similar 2021 trajectory
Analyst Crypto Bullet noted that ETH’s charts are similar to its 2021 behavior. The chart shows that Ethereum saw a double top pattern during its uptrend three years ago. The cryptocurrency then confirmed the pattern by falling below the key support area of $3,100.
However, after two weeks of consolidation, it regained this level, which led to a breach of ETH’s all-time high (ATH). According to the analyst, Ethereum is repeating this pattern after yesterday’s drop, suggesting that the “worst case scenario” for the cryptocurrency would be reaching ATH levels again.
“The percentages achieved by ETH in the first few weeks of the year were pretty crazy,” Daan Crypto Traders said, highlighting ETH’s historical performance during the first few weeks of the year.
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Ethereum posted mostly negative weekly returns in the first weeks of 2024, according to CoinGlass data, but began six straight weeks of positive trends as February approached. This may suggest that ETH’s negative performance could be reversed in the coming weeks. Nonetheless, Daan advised investors to look at quarterly returns for a better overview of seasonality.
At the time of writing, ETH is trading at $3,230, up 3% over daily trading hours.
Featured image from Unsplash.com, chart from TradingView.com