Crypto

Despite a Bear Flag on the Ethereum Price Chart, Bulls Are Still Hoping for $10,000

Ethereum

The latest ETHEREUM price loss has triggered a typical bearish pattern, putting ETH at risk of falling to $3,200.

As it wobbles towards a critical support level of $4,000, Ethereum’s native token Ether (ETH) looks ready to extend its selloff this week.

On December 6, the price of Ethereum dropped by more than 5.50 percent to an intraday low of $3,913. It did so by slipping through upward sloping support, forming an ascending channel that looks like a bear flag, indicating a bearish continuation situation.

Bear flags are often identified by conservative traders when an instrument consolidates higher inside a parallel channel after a significant price decrease (called flagpole). They expect the price to break below the lower trendline of the flag. When it occurs, traders calculate their profit objective by deducting the height of the flagpole from the breakthrough level.

Applying the bull flag strategy to Ether’s current price trends, the cryptocurrency is expected to drop towards $3,200 in the coming sessions. The level also happens to be around the 0.5 Fib line ($3,264) on the Fibonacci retracement graph generated from the $720 swing low to the $4,808 swing high.

More proof is required.

While the bear flag configuration suggests that Ether will face more suffering in the future, other analysts feel the Ethereum token still can rise.

For example, independent market analyst PostyXBT asked his massive Twitter following to pay attention to Ether’s deep price wick from Dec. 4, highlighting how the cryptocurrency’s sudden crash from near $4,240 to as low as $3,575 (data from Coinbase) was met with an aggressive buying response by traders.

“With a weekly closing above $4k, ETH is one of the strongest-looking coins out there,” the anonymous analyst said, adding that “despite the wick,” few people were holding the structure.

Meanwhile, another well-known expert, Crypto FOMO, cited the comeback on December 4 as a reason to be bullish about Ether. In a Dec. 6 study, the expert predicted that if Bitcoin can hold its rising channel support (the bear flag structure), bulls will increase its value to $10,000.

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“That’s also because Ethereum crashes a lot less than other cryptos, which is quite bullish,” the channel said, pointing to Ether’s increased strength against Bitcoin (BTC).

After breaking out of its ascending triangle on the weekly chart, Ether appears to have been aiming a move toward $6,500.

In more detail, the price of Ethereum exited the triangular range in the week ending October 25 after consolidating within it for just over four months. Traders did, however, return to test the structure’s top trendline for support, as is typical of bullish continuation setups.

As long as the price continues above the triangle’s upper trendline, it has a better chance of continuing its upward rise – by as much as the structure’s maximum height, as seen in the chart above.

A decisive break below the triangle’s bottom trendline, on the other hand, might invalidate the bullish setup.

Strong foundations

James Wo, CEO/founder of DFG Group, a Singapore-based venture capital firm, blamed Ether’s recent price corrections on the cryptocurrency’s consistently positive correlation with Bitcoin, noting that a spot market selloff in the BTC market, fueled by the ongoing Omicron FUD, has seen exchanges liquidate $2 billion worth of traders’ margined positions, hurting ETH in the process.

However, the expert suggested that ETH’s price will rise as a result of its widespread use in the burgeoning non-fungible token (NFT), decentralized finance (DeFi), and metaverse spaces.

“The open interest levels witnessed for both BTC and ETH up until this correction were a crucial indicator that a bearish outcome was extremely probable,” Wo stated, adding:

“Based on the technological developments and contributions we are observing from this industry, we continue to believe that fundamentals are robust and long-term valuations are still quite inexpensive.”

At the time of writing, ETH/USD was trading at $4,050.

The Author

Samuel Adeshina

Samuel is a financial reporter whose interests include blockchain, market, business, insurance, and Crypto to provide relevant information to all interested.