Key Takeaways:
- Ethereum prices have formed a bullish technical pattern called the ascending triangle.
- Analysts view ETH's failure to climb above $1,300 as a signal for further downside movement.
NEW DELHI (CoinChapter.com) — Ethereum (ETH) prices might be eyeing a boost as the prime altcoin painted a bullish technical pattern on the charts.
A horizontal trendline that connects swing highs and an ascending trendline connecting swing lows forms an ascending triangle pattern. Volume helps determine if a breakout is strong.
In an ideal world, buyers would enter the market as the trendlines close the gap, pushing prices above horizontal resistance with heavy volumes. Unfortunately, a low-volume breakout on the upside will likely fail, resulting in a pullback.
Also Read: Ethereum’s mini-rally could do little in protecting ETH from a 30% price drop — here’s why.
Per the rules of technical analysis, the price target for a breakout is equal to the triangle’s height at its thickest point. Therefore, analysts speculate ETH prices might jump more than 64% from current levels to reach $1,831.
However, ETH prices have been in a downtrend since Jul 8, after failing to break above the triangle’s upper trendline. As a result, Ethereum prices are currently testing the upwards-sloping trendline of the pattern.
Ethereum’s RSI Shows Strong Selling Pressure
Ethereum prices dropped nearly 7% on Jul 11, reaching $1,091 from an intraday high of $1,170. Meanwhile, the relative strength index for ETH became neutral, clocking at 39.87 on the daily timeframe.
The RSI measures the magnitude of recent price changes to analyze overbought or oversold conditions. Traders often consider oversold RSI values as a buy signal. However, the falling RSI trendline indicates strengthening selling pressure for Ether prices.
A sell-off might see ETH prices invalidate the bullish triangle setup and fall to support near $1,063. Moreover, if Ether prices breach below immediate support, the token might fall to support near $922.
Finally, a marketwide sell-off might see ETH prices fall 26% from current levels to reach $820 before recovering.
Conversely, if the trendline support holds, ETH prices might start an uptrend, which might attract investors eyeing a breakout from the ascending triangle setup. An uptrend would see Ether move above its 20-day exponential moving average (20-day EMA, red wave) to challenge resistance near $1,240.
Also Read: Ethereum (ETH) Prints Bullish Technical Pattern, Why It Could Revisit $1,450.
Moreover, a break above immediate resistance would help ETH prices rise to challenge resistance from its 50-day EMA (purple wave) near $1,450. Finally, a sustained uptrend might see Ether jump 50% to target resistance near $1,680 before corrections pare gains.
Analysts Remain Divided
Crypto analysts remain divided on Ether’s prospects, with a few citing the ascending triangle pattern as a bullish tailwind for the prime altcoin’s prices.
An investor, who goes by the moniker Nika Deshimaru, asserted that he might increase his ETH investment “temporarily” to profit from the ascending triangle pattern.
Another pseudonymous crypto trader, CJ, shared an ETH chart on the 1-hour time frame. The trader forecasted a jump to $1,300 for the token, which is currently a key resistance level for Ether.
However, some analysts were not very hopeful for Ether’s price action. For example, Crypto trader Profit Blue noted the token had formed a bearish pattern, which forecasted more downside for ETH prices.
At writing, ETH was trading at $1102, down 5.8% on the day.
