Ethereum Ether's native token (ETH) appears poised to extend its sell-off this week as it teeters near a key $ 4,000 support level.
The price of ETH fell more than 5.50% on December 6 to an intraday low of $ 3,913. In doing so, it slipped through the upward sloping support that made up an Rising Channel that more or less looks like a Bearish Flag, a bearish continuation setup.
Conservative traders often spot Bear flags when an instrument consolidates higher within a parallel channel after a significant price drop (called a flagpole). They anticipate that the price will break below the lower trend line of the flag. And when it does, traders set their profit target by measuring the height of the flagpole and subtracting it from the breakout level.
By applying the Bull Flag strategy to Ether's ongoing price trends, the cryptocurrency can be expected to drop towards $ 3,200 in the coming sessions. Interestingly, the level is also close to the 0.5 Fib line (~ $ 3,264) of the Fibonacci retracement chart drawn from the $ 720 low to $ 4,808 high.
More confirmation is needed
While the Bear Flag setup suggests more pain for Ether going forward, some analysts believe that the Ethereum token still has more room to run higher.
For example, PostyXBT, an independent market analyst, order his huge Twitter follower base to draw attention to Ether's deep price wick from Saturday, underscoring how the cryptocurrency's sudden drop from close to $ 4,240 to just $ 3,575 (data from Coinbase) was greeted by merchants with an aggressive buy response.
"The weekly close above $ 4k means that ETH is one of the strongest looking currencies out there," the pseudonymous analyst noted, adding that not many held the structure "despite the wick."
Meanwhile, another popular Crypto FOMO analyst too referring to Saturday's rebound as a reason to stay bullish on Ether. In an analysis published Monday, the analyst said that the cryptocurrency's ability to maintain its growing channel support (the Bear Flag structure) could lead the bulls to push its value to $ 10,000.
"That is also because Ethereum is collapsing much less than other cryptocurrencies, which is very optimistic," the channel noted, highlighting Ether. rising force against BitcoinBTC).
On its weekly chart, Ether appears to have been looking for a move towards $ 6,500 after breaking out of its Ascending Triangle.
In detail, the ETH price left the Triangle range in the week ending October 25 after consolidating within it for just over four months. Nonetheless, traders retested the upper trend line of the structure as support, as did common in bullish continuation setups.
As long as the price remains above the upper trend line of the Triangle, its probability of continuing its bullish rally remains higher, as much as the maximum height of the structure, as shown in the chart above.
On the other hand, a decisive break below the lower trend line of the Triangle ran the risk of invalidating the bullish setup.
Solid fundamentals
James Wo, CEO / Founder of DFG Group, a Singapore-based venture capital firm, charged Consistently positive correlation of Ether with Bitcoin behind its latest price corrections, signaling that a spot market sell-off in the BTC market, led by the current Omicron FUD, has had exchanges liquidating $ 2 billion in traders' margin positions, hurting ETH as a whole.
Related: BTC sentiment 'comparable to a funeral': 5 things to watch out for in Bitcoin this week
But the analyst also anticipated a price rally for ETH based on its successful adoption in the emerging non-fungible token (NFT), decentralized finance (DeFi), and the metaverse space.
"The levels of open interest levels seen up to this correction for both BTC and ETH were an important indicator that a bearish scenario was highly probable," Wo explained, adding:
"We still believe that fundamentals are strong and long-term valuations remain very low based on technological advancements and the contributions that we are witnessing in this industry."
ETH / USD was trading at $ 4,050 at the time of writing.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and business move involves risk, you should do your own research when making a decision.
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