As Ethereum’s rally faces a strong resistance zone, Ether (the native token of Ethereum) could fall below $3,000.
The market-wide price rise caused Ether’s price to soar by nearly 22% over a month. This pushed Ether, the second largest cryptocurrency in terms of market capitalization, from below $3,000 to over $3,650 in just eight days, prompting more bullish forecasts.
Crypto Cactus, a Twitter-based technical chartist, stated that six thousand dollars would be achieved quickly and $10,000 has been programmed. David Gokhshtein (CEO of distributed data network PAC Protocol) predicted a $10,000 upside target to Ether.
We are waiting for $ETH to reach $10,000 before the party can get started. Side note: What will happen to the #NFT Market?
— David Gokhshtein (@davidgokhshtein) October 8, 2021
The price of Ether could be impacted by three bearish indicators, which could reduce its upside movements and limit some of its gains.
There are two resistance zones and one rising wedge
Three bearish indicators that might cause Ether to reverse are a rising wedge and a descending trendline support.
ETH/USD 4H price chart featuring bearish confluence. Source: TradingView.com
As ETH rallied, a rising wedge emerged and left behind a series of higher highs as well as lower lows. The cryptocurrency’s uptrend occurred against decreasing volume, indicating a lackluster bullish conviction among traders.
The structure’s apex, which is the point at which its two trendlines intersect, is also located around two historical resistance zones. As shown in the chart, the first is an interim resistance bar. It was previously identified as ETH’s top over $3,650.
The second resistance, however, is a descending trendline. This can be seen more clearly in the daily charts below at $3,800.
Daily price chart for ETH/USD showing the resistance to the descending trendline. Source: TradingView.com
The rising wedge’s peak and the resistance trendlines present bearish reversal risk to Ether. If it happens, the Ethereum token could crash to the maximum height between the trendlines’ upper and lower trendslines.
Related: Three factors that could send Ethereum prices to 100% in Q4
This puts it below $3,200. It was previously an accumulation zone for Ethereum traders during the first half September 2021.
Ctivating the inverse head and shoulder
However, a drop to or below $3200 does not automatically make Ether a bearish market. It could also trigger a bullish head and shoulder setup.
The USD/ETH 4H price chart shows an inverse head-and-shoulders pattern. Source: TradingView.com
If everything goes according to plan, traders will begin to accumulate ETH tokens, which will cause a rebound towards the neckline in the chart. The ETH price would then place its inverse head/shoulder target at a distance equal to the maximum distance between pattern’s neckline (or bottom) and the floor.
This would place Ether on track to new all time highs of around $4,500.
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