Ethereum risks ‘double-bust’ drop despite ETH price rebounding 30% in two weeks

After a devastating selloff at the start of 2022, Ethereum’s native token Ether (ETH), took only two months for it to recover.

The price of Ethereum has fallen but there are still risks

The ETH price climbed to $3,350 on March 28, after rising by more than 30% in two weeks and by more that 50% when compared with its January 24 low of $2,160.

The ETH/USD pair may have “busted” what appeared to be a bearish continuation setup called the “symmetrical triangle”.

Daily price chart for ETH/USD with a’symmetrical Triangle’ reversal. Source: TradingView

Busted patterns are when the breakout occurs in one direction and prices reverse. This can lead to strong moves,” says Tom Bulkowski, a market analyst. This gives hope that Ether will rally to the target of $4,000 for the triangle pattern in the coming days.

Fakeouts of ETH

The market analyst points out that symmetrical triangles are more likely to “double-bust”, meaning that the final breakout direction is the same as the initial one.

Double-bust scenarios could see Ether’s upward trend end soon. This would cause a reversal towards the top of the symmetrical triangle. The downside outlook appears as ETH retests its support-turned-resistance range that served as a selloff area for traders in the January-February session, as shown in the chart below.

Daily price chart for ETH/USD with double-bust scenario. Source: TradingView

A second selloff in the area could trigger double-bust risk, causing Ether’s price drop towards the downside target of $1,800. This is after Ether has measured the distance between the upper and lower trendlines and added it to the breakout point.

It is interesting to note that the $1,800 level was crucial in limiting Ethereum’s downside attempts during the selloff in May-July 2021.

If the price rises significantly above the resistance range, then the double-bust arrangement will be invalidated. Independent market analyst PostXBT stated that shifting levels of support around $3,350 could increase ETH’s chances to reach $4,000.

$ETH 1W Decent pump, but ETH is still at weekly resistance. I am cautious and would like to know more. Flip $3,350, and we can then discuss the possibility of $4k again.
— Posty (@PostyXBT), March 28, 2022

The upside of Ethereum

Ether’s 30% rebound coincided with the Ethereum Blockchain’s merger with the Kiln testnet. This signaled that the blockchain would transition completely to a proof of stake network by summer 2022.

Speculators have waited patiently for Ethereum to upgrade to ETH 2.0, as the upgrade promises more efficient and cheaper transactions.

It would work by offering network participants carrot-and stick incentives to collaborate. Participants would need to “stake” 32 ETH for 18 month to become validators. They would also receive an annual yield in the same token.

Total number of ETH deposits to ETH 2. Source: Glassnode

Many analysts believe that Ether prices will rise as supply decreases, especially if demand continues to rise.

The promised Premine dilution can be seen on the left. The right shows what was accomplished. After PoS, Ether supply will drop. Think very carefully what this unfulfilled promise and the disguised whales of the Ethereum presale mean for Ethers future, its Proof of Stake & Web3..
— stefan huber.justice (@Leerzeit) March 25, 2022

Related: Lido’s Staking Pool adds $110M Ethereum to ETH, ETH Price Hits $3K

Ether faces simultaneous downside risks because of its strong correlation to the U.S. stock exchange and Bitcoin (BTC). BTC’s relationship with stocks is being closely monitored this week, as BTC/USD challenges key points of resistance.

com. You should do your research before making any investment or trading decision.

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