Ethereum shows signs of dipping considerably in the short-term run following a bearish pattern of head and shoulders.
The head and shoulder pattern is a trading pattern that is characterized by three bullish peaks namely: right shoulder, left shoulder, and head with a supporting neck-line resting at the base.
Head and Shoulder Pattern
The left shoulder stands at the top of the opening bull run which is followed by the second uptrend that forms the head. Following a heavy sell-off, the right shoulder spikes near the same height as the first one. At this time, buyers will be rushing to push the cryptocurrency price back up a third time.
The bear wins as soon as the shoulder falls back to the neckline and the bulls lose momentum.
A typical H&S pattern indicates a bullish reversal and a rapid price decline on the horizon. Ethereum’s price has fallen below the support levels of $565 and $480.
Ethereum is moving ever closer to the $400 support level as the bear market progresses. Although there are a little buyer sentiment and rebound in price, ETH may still break below the key level and fall to $340.
If confidence departs form Ethereum completely, the Fibonacci Retracement indicator predicts a hard bottom of $220.
Also, note that the 50-exponential moving average line is crossing below the 200-exponential moving average line. This is another strong indicator of an upcoming fall in price.
At the time this piece was written Ether had declined by 8.71% within the last seven days. The price is moving close to $400, and there is no sign of a recovery rally yet.
If the price continues to fall, traders may sell off out of panic. However, this doesn’t mean that Ethereum will never recover. In terms of market capitalization, it is still second only to Bitcoin.