© Reuters Here’s How to Take Opportunities With Ethereum(ETH) Drop
CriptoFácil – Like the rest of the market, the price of () is undergoing a correction phase in progress. On the four-hour chart, the series of new lows indicates that the ETH price is experiencing a steady decline.
Although the pattern appears to be carrying a downtrend, its technical setup is intended to offer a strong long opportunity after the breakout of its resistance trendline. So, see how to trade this pattern and try to make long-term profits.
“megaphone” pattern
Ethereum has consolidated the formation of a “megaphone” pattern, that is, the pattern where the two lines are very open. Under the influence of this pattern, the cryptocurrency is forming higher price swings, indicating increased volatility in the market.
Anyway, ETH price recently reversed from this pattern resistance trendline and started a new bearish cycle. Thus, the continuous correction swinging between the two trendlines revealed a bearish channel pattern.
This Thursday (2), the price of ETH drops 1.6% according to CoinGecko and shows rejection candles and falling volume at the trend line, indicating a greater chance of a bearish reversal. With sustained selling, the cryptocurrency could drop as much as 6.5% to meet the lower support trendline.
If such a drop indeed takes place, the ETH price could look for the supports in the $1,560 and even $1,510 region. At the limit, the arrival of these supports can represent losses of up to 10% against the current price.
However, the most common outcome of this pattern is a strong directional rebound after the breakout of its resistance trendline. Thus, a possible breakout of the overhead trend line will accelerate buying pressure and drive prices back towards the last swing high resistance of $1,720, or 4.36% upside from the current price.
Furthermore, the buying pressure intensified by the channel breakout could also help buyers complete the aforementioned bullhorn pattern on a bullish note.