Ethereum Could Face Significant Price Drop to $1,700, Analyst Warns
An analyst has provided insights into a potential scenario where Ethereum (ETH) could experience a sharp decline in price, possibly dropping to $1,700 if a critical support level in a technical analysis pattern fails to hold.
Ethereum’s Vulnerability to Falling Below Ascending Channel Support
In a recent analysis shared on X, analyst Ali Martinez delves into the price trajectory of Ethereum based on a pattern emerging in its 12-hour price chart. The pattern under scrutiny is an Ascending Parallel Channel from technical analysis, characterized by two parallel trendlines sloping upwards.
Within this channel, assets typically undergo consolidation with an upward bias. The higher peaks in Ethereum’s price align with the upper boundary of the pattern, while higher lows correspond to the lower boundary.
Similar to other technical analysis patterns, the upper line is expected to act as a resistance level in the future, while the lower line functions as a support level. Breakouts beyond these boundaries can signal a continuation of the prevailing trend.
While the Ascending Parallel Channel is not the most common pattern, it offers valuable insights into Ethereum’s price movements. The chart shared by the analyst illustrates Ethereum’s trading within this channel over the past few years.
Recent price action indicates Ethereum briefly tested the lower boundary of the Ascending Channel, finding support around $2,500. While the coin currently hovers near this level, a potential retest could be on the horizon. Historically, this level has held firm for Ethereum, suggesting a possible rebound towards $4,000 or even $6,000 if maintained.
However, the analyst cautions that failure to hold above $2,500 could spell trouble for Ethereum, with a downside target of $1,700 looming. Such a scenario would represent a significant decline of over 39% from the current price.
The market will closely monitor whether Ethereum revisits the lower boundary of the Ascending Channel in the days ahead.
Current ETH Price
As of the latest data, Ethereum is trading around $2,800, reflecting a decrease of over 6% in the past week.
Image credit: Dall-E, charts sourced from TradingView.com