The native token of Ethereum, Ether, does look pretty excited to go through a breakdown move in May. This would create a formation of a convincing bear pennant structure. The price of the token has been fluctuating since the 11th of May inside a range that has largely been defined by a couple of converging trendlines. Its move sideways also coincides with a massive drop in its trading volumes, which also underscores the possibility that the USD/ETH exchange could be painting a bear pennant. For the uninformed, Bear pennants are simply bearish continuation patterns- which means that they resolve after the price starts breaking below the lower trendline structure.
Ethereum Price Could Go Through A Crash
Due to this technical rule, Ethereum does run the risk of closing below the pennant structure- which would then be followed by additional moves to the downside. The height of the flagpole of ETH is around $650. Therefore, if the price does undergo a massive breakdown at the apex point of the pennant near a sum of $2,030 then the bearish target of the structure would be below $1,500- down over 25% from the price on the 15th of May.
It is quite interesting to note that the profit target of the bear pennant does fall into an area that solely precedes a price rally of 250% in the 2021 session of February to November. Also, the target seems to be around the 200-day exponential moving average of Ethereum- which is currently around $1,600. Ideally, the demand zone would be prompting the traders of Ether to accumulate the tokens that it has in anticipation of a sharp retracement on the upside.
Ethereum has already been going through after testing the demand zone, along with the falling channel’s lower trendline, as support. This could definitely push the exchange of ETH/USD to reach the upper trendline of the channel near $3,000.