Ethereum traders gauge fakeout risks after 40% ETH price rally

After ramming into an important technical resistance confluence, Ethereum’s native token Ether (ETH), saw a slight pullback on July 17.

Price breakout for Merge-led Ethereum

ETH’s price fell 1.8% to $1328 after it failed to move above two strong resistance levels, the 50-day exponentially moving average (red wave; 5-day EMA) and a descending trendsline (black), which have served as price ceilings since May.

Daily price chart for ETH/USD Source: TradingView

Ether rose by more than 40% between $1,000 on July 13 and $1,400 July 16. This was partly due to the euphoria around “the Merge”, which is scheduled for September.

Technical analysts also felt that Ether’s upside sentiment was boosted by the appearance of a golden cross on Ethereum’s 4-hour chart.

#ETH/USD We got a bullish cross between 200 & 50 moving averages on 4h Looking for more upside locally
— Albert III (@AlbertcryptoN), July 15, 2022

ETH price risks fakeout

Ether’s price rally of 40% plus since July 13 saw its price rise above a critical horizontal resistance, which somewhat constitutes an “ascending triangular pattern.”

Ascending triangles are often continuation patterns. In some cases, however, ascending triangles may appear at the bottom of a downtrend. This can lead to a bullish reverse.

Scott Melker, an independent analyst in the market, saw ETH’s bullish exit from its ascending triangle pattern and as a sign it would rally further. He stated:

A break of $1,284 will send prices skyrocketing, since there is almost no resistance up to the $1,700s.

Ether is currently in a breakout zone and has already crossed $1,284 above its upper trendline. However, trading volumes have not increased since Ether’s close above the ascending triangular trendline. This suggests that there is a decrease in upside momentum.

Daily price chart for ETH/USD Source: TradingView

ETH’s price could revert to the triangle’s trendline at $1,284 support. If the ETH/USD pair recovers from $1,284 with convincing volumes or breaks above the resistance confluence discussed above, it could maintain its bullish bias.

Related: Lido DAO is most ‘overbought’ since April, as the LDO price rallies by 150% in just two weeks. What’s next?

A break below $1,284 could result in the ascending triangle setup being reactivated with a bias toward bears. According to a rule of technical analyses, ETH could crash to $750.

Daily price chart for ETH/USD with ascending triangle breakdown. Source: TradingView

This is a drop of 45% from the current price levels.

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

Close Bitnami banner