The chances of Ether (ETH’s) price falling below $4000 have increased due to a Nov. 16 Ether sell-off
ETH fell 10% to $4,100 in the midst of a continuing market correction led Bitcoin (BTC). Ether fell below its fourth quarter upward trendline support.
Daily price chart for ETH/USD Source: TradingView
ETH/USD also tested the 50-day exponential moving mean (50-day EMA, the velvet wave in chart above) before it bounced higher. If the 50-day EMA fails, then $3,700 is the next support line.
Are there more declines in the future?
This ascending trendline is part of a rising wedge. Analysts consider it a bearish signal. This occurs when the price fluctuates within a range defined in two converging, rising trendslines.
Daily price chart for ETH/USD with rising wedge setup. Source: TradingView
Analysts confirm a wedge breakout when prices break below the lower trendline, if this is accompanied by an increase in trading volumes. They look for a run towards the level with a distance equal to the gap between the trendlines.
Ether could drop to below $3,000 based on rising wedge setup. But there’s a catch.
Assisting the ascending triangle resistance
An ascending triangle is able to offset the bearish reversal setup caused by the rising wedge structure, which will put Ether at $6,500 by 2021.
After breaking above the resistance level, the price of ETH retests it as support. This is the bullish setup. This move is a good sign for investors and traders who have a long-term outlook that is based on strong fundamentals.
Three-day chart of the USD/ETH exchange rate with ascending triangle setup. Source: TradingView
The latest Ether pullback could prove exhausting, as ETH prices reach the triangle resistance below $4,000 — and the rising wedge’s lower trendline. If the rebound follows suit, the price could rise to $6,500.
You should research all aspects of trading and investment before making any decisions.