Ethereum price has witnessed a drop to as low as $1,285 during the weekend session. The somehow powerful support at $1,400 failed to hold, leading to the breakdown. Overhead pressure mounted, mainly with investors panic-selling to cash out for profit.
Meanwhile, a recovery is underway, with ETH stepping above $1,400. The price is doddering at $1,440 amid the push for higher levels. The 4-hour chart brings to light the formation of a falling wedge pattern.
This is a bullish pattern formed by two rising trendlines connecting the asset’s lower lows and lower highs. The pattern is distinct because it contracts downwards as the trading range narrows. Contrary to the symmetrical triangles, which have no bearish or bullish bias, a falling wedge pattern often results in a breakout to the upside.
A falling wedge forms amid an ongoing downtrend and can be short-term or long-term, depending on the time it took to develop. The upper trendline (resistance) and the lower trendline (support) converge as the pattern matures.
As the wedge contracts, volume declines aggressively, indication a period of consolidation as buyers prepare to take control. Usually, a breakout is expected as the price slices through the upper trendline. The breakout is usually rapid and must be time to make the most of the pattern. Note that traders must wait for the breakout to be confirmed to ensure that false upswings are avoided.
For now, Ethereum is nurturing a breakout that could hit levels towards $2,000. However, resistance is expected at $1,520, the 50 Simple Moving Average at $1,600, and the 100 SMA, slightly above $1,800. Similarly, the uptrend is supported by the Relative Strength Index after bouncing from the oversold area.
Ethereum intraday levels
Spot rate: $1,440.
Relative change: 20.
Percentage change: 1.4%.