Last updated on May 18th, 2024 at 11:40 am
Ethereum is currently experiencing a rally, however, the price might significantly decline if this technical pattern happens. The second-largest cryptocurrency by market cap is enjoying a price surge and is leading other altcoins trading in the green zone.
Nevertheless, a new pattern has been spotted on the charts that could send the price of the token nosediving. Ethereum traders are noticing what appears to be an indicator of impending storms.
According to technical analysis of the ETH chart, a possible double-top pattern may emerge and send Ethereum’s price plunging even lower. A double-top pattern is a traditional bearish reversal signal that indicates the potential price drop of an asset.
What does this mean for Ethereum?
The double-top pattern shows two successive peaks at almost the same price level, followed by a slight trough. This pattern implies that the bears might be poised to seize control as the bullish rally is beginning to decrease.
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The stakes are high for Ethereum as it gets closer to a crucial resistance level that was established on January 12. For ETH to keep growing, it must be able to break through this peak.
Source: TradingView
The decreasing trading volume that has accompanied Ethereum’s recent price rally adds to the perception of an imminent reversal as the market moves closer to this critical turning point.
Technical analysis suggests that a price increase combined with declining trading volume can frequently indicate a lack of confidence among buyers and raise the possibility that the rally won’t last.
The probability of the double-top pattern being confirmed rises sharply if the market is unable to generate the volume required to break through the resistance level set in January.
In addition, the price of Ethereum might take a nosedive to the $2,500 zone if it fails to break through the resistance set on January 12. Even though the double-top pattern is yet to happen, there are clear signs, and traders are advised to exercise caution.
According to data from Coinstats, Ethereum is currently trading at $2,752, representing a 3.1% increase in the last 24 hours.
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Victor Swaezy
Victor Swaezy is a crypto-journalist with more than 3 years of experience in covering blockchain technology and digital currencies news. Known for his comprehensive reporting, Victor has contributed to leading industry publications, providing market participants with the required knowledge to make informed decisions. When he is not working, he loves to watch movies and have a good time.