One analyst explained how Ethereum is currently re-testing the breakout zone and this could lead to a price target of $3,500.
Ethereum is retesting the breakout line of the ascending triangle
As analyst Ali points out in a new report: post At
An “ascending triangle” is, as the name suggests, a pattern in technical analysis that resembles a triangle. This pattern includes a horizontal line created by connecting high highs and a sloping line connecting higher lows.
If the price retests the horizontal top, you may feel some resistance. On the other hand, touching a lower level may cause the price to bounce back.
A breakout of either of these lines indicates that the trend is likely to continue. Naturally, a departure from the triangle in an upward direction indicates bullish momentum, while a downward departure indicates bearish momentum.
Like the ascending triangle, there is also the “descending triangle”, which is a similar pattern except for the fact that the two levels switch (since the prevailing trend is downward).
Now here is the chart shared by Ali showing how the price is currently interacting with the rising triangle:
Looks like the asset's value has plunged back towards the triangle in recent days | Source: @ali_charts on X
As you can see in the graph, Ethereum found a bottom at the lower line of this ascending triangle pattern in October. After this low, the asset rebounded sharply and continued to challenge the upper line.
The cryptocurrency succeeded in finding a breakout above the triangle and observed its bullish momentum continuing, hitting a new high this year. However, the asset has recently been on a downward trend again and has now fallen towards the triangle breakout line.
So far, this line has provided support for the asset as the price has been able to sustain above it. The analyst believes that this retest could be a sign that the coin is gearing up for a further rally.
“The price range between $2,150 and $1,900 could be an ideal area for accumulation before ETH sets a higher target of $3,500,” explains Ali. At current prices, this target represents a nearly 60% upside for the asset.
As analytics firm Glassnode explained in its latest weekly report, October, the month in which Ethereum broke out of the slope of the triangle, was also an inflection point for the asset in terms of on-chain activity.
The trend in three on-chain indicators for ETH | Source: Glassnode's The Week Onchain - Week 51, 2023
Looking at the chart, both the number of Ethereum transactions and transfer volume are showing an upward trend since the inflection point a few months ago, which could lead to a rise in the price.
ETH price
Ethereum has been somewhat sluggish recently, consolidating around $2,200.
The price of the coin appears to have been moving sideways recently | Source: ETHUSD on TradingView
Featured image by Kanchanara on Unsplash.com, chart by TradingView.com, Glassnode.com
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