The price of Ethereum has been consolidating for quite some time as it followed Bitcoin’s lead. Unlike other altcoins, ETH’s volatility appears to be limited for now, with a high probability of a rebound as it forms a breakout pattern.
A comeback in the making
Ethereum’s price action over the past fifty days has formed a symmetrical triangle pattern. This setup consists of three lower highs and four higher lows connected by trendlines.
The formation predicts a 34% movement, a movement determined by measuring the distance between the triangle’s initial swing points. Adding this distance to the breakout point reveals the target.
Assuming Ethereum price breaks bullish, theoretical predictions put ETH at $3,833. Rather, a bearish outlook would point to a crash towards $1,688.
From a technical standpoint, the bullish outlook seems unlikely given the plethora of hurdles on the upside. The 50-day Simple Moving Average (SMA) is the first block, after which the daily supply zone stretching from $3,187 to $3,372 will prevent bullish moves.
On the other hand, the price of Ethereum is more likely to break the lower trendline of the symmetrical triangle due to Bitcoin’s uncertain nature and lack of support levels. This outlook predicts a 34% crash to $1,668.
Interestingly, this level coincides with the support level going all the way back to March 28, 2021.
This bearish outlook is supported by the recent surge in the supply of ETH on exchanges. The total amount of ETH present on centralized entities indicates that investors intend to sell should the need arise.
In the event of a flash crash, the downturn will steepen as these holders sell their holdings in panic. For now, the number of such tokens has increased from 15.53 million to 16.83 million – Net inflow of 1.3 million coins.
This 8.3% increase further confirms the bearish outlook obtained from a technical perspective.
While the scenarios look bleak for Ethereum’s price, a bullish move, one that breaches the 200-day SMA at USD 3,530, will create a relatively higher high and invalidate the bullish thesis. In such a case, investors can expect ETH to hit its target of $3,833, completing its 34% rise.
In some cases, the rally could extend to the $4,000 psychological barrier. This is where ETH is likely to set a local top.