Ethereum’s domestic token ETH fell more than 20 percent from its session high of $ 1,350 due to profit-taking. While technical indicators are pointing to another correction, one analyst believes the second largest cryptocurrency could hit its record high in the upcoming sessions.
The pseudonymous company based its optimistic setup on one condition: the ETH / USD exchange rate initially closes above the USD 1,116 to 1,140 range. Only then could the pair confirm a prolonged rebound towards USD 1,420, which was reached in January 2018.
Ethereum trade setup, as presented by KongBTC. Source: ETHUSD on TradingView.com
ETH / USD formed a local support level near USD 1,000 ahead of Monday’s US trading session. The pair saw a retreat, albeit a small trading volume, suggesting that traders may want to keep selling the Ethereum token. Meanwhile, ETH / USD’s ability to log a full retracement appeared to be around $ 919.
This is due to a technical indicator known as a rising wedge. In retrospect, it is a bearish reversal pattern that occurs when an asset is trending up while making a series of higher highs and higher lows. Ultimately, the price breaks out of the pattern and drops to as low as the maximum height of the wedge.
Ethereum Rising Wedge setup sets breakout target near $919. Source: ETHUSD on TradingView.com
Ethereum formed a similar wedge when it jumped from $ 924 to $ 1,420 in the first week of January. Meanwhile, the cryptocurrency broke out of the pattern around 00:00 GMT on Monday, accompanied by a surge in volumes. This increased the possibility of hitting the wedge target near $ 919.
ETH pitchfork sample
More bearish warnings came from Josh Olszewicz, an independent cryptocurrency market analyst. The chartist highlighted its pitchfork pattern, revealing that Ethereum may have surpassed its recent high. This indicated an extended downward correction for ETH / USD.
“[The pair] seeks a bath too [middle line], 200-day EMA and annual pivot for the next few months ~ 500-530, ”said Olszewicz.
Ethereum Pitchfork setup sets the downside target near $500. Source: ETHUSD on TradingView.com
The bearish analogies showed up despite a growing bullish bias for the cryptocurrency industry as a whole.
After U.S. President-elect Joe Biden confirmed his administration will add trillion dollars to the size of its coronavirus stimulus package, traders believe the U.S. dollar will continue to lose value. As a result, safe haven assets like gold and bitcoin would continue their upward trend.
Ethereum, which correlated positively with the Bitcoin market, expects an increase alongside the top cryptocurrency.