The native cryptocurrency of Ethereum, Ether (ETH), is in danger of dropping below $3,200 in the next few days as its rise runs into a significant resistance zone.
In the aftermath of a market-wide price surge, Ether’s price ballooned by over 22% month-to-date. In the first eight days of October, this propelled the second-largest cryptocurrency by market value from under $3,000 to nearly $3,650, sparking further positive expectations.
Crypto Cactus, a Twitter-based technical chartist, said, “Six thousand dollars will happen soon. $10,000 is designed”. The CEO of the distributed data network PAC Protocol, David Gokhshtein, also forecasted a $10,000 price goal for Ether.
However, the price of Ether might collide with three prominent negative signs, limiting its higher movements and wiping off some of its recent gains.
A rising wedge and two resistance zones
A rising wedge, a declining trendline resistance, and an intermediate resistance bar, as seen in the chart below, are the three negative indications that might cause Ether to experience a bearish reversal.
As ETH rose, a rising wedge formed, leaving a trail of higher highs and lower lows in its wake. Meanwhile, the cryptocurrency’s ascent was accompanied by a drop in volume, indicating a lack of optimistic conviction among traders.
Furthermore, the structure’s apex—the intersection of its two trendlines—is located near two previous resistance zones. The first is an intermediate resistance bar that earlier identified ETH’s peak above $3,650, as shown in the chart above.
A falling trendline, shown more clearly in the daily chart below around about $3,800, serves as the second resistance.
As a result, the apex of the rising wedge, as well as two resistance trendlines, represent bearish reversal risks for Ether. If this occurs, the Ethereum token will drop by the maximum height between the wedge’s top and lower trendlines.
This puts it on track to go below $3,200, a level where Ethereum traders piled up in the first part of September 2021.
Is it possible to activate the inverted head and shoulder?
Ether does not always enter a full-fledged bearish cycle if it falls to or below $3,200. On the other hand, a bullish inverse head and shoulder setup might be triggered.
If the setup works out as planned, traders’ ETH token holdings will grow at $3,200. Prompting a recovery toward the chart’s neckline region. As a result, the inverse head and shoulder goal for ETH would be set at a length equal to the greatest distance between the pattern’s neckline and bottom.
This would put Ether on track to reach fresh all-time highs of almost $4,500.