This Technical Analysis signals a further heavy drop for Ethereum…Should you be concerned?


After an extended uptrend since the Covid-crash earlier this year, Ethereum has been on an unstoppable bullish trend. It managed to get out of a 2-year consolidation area and get back on track. Unlike Bitcoin, Ether prices did not even reach half of their previous all-time high of 2017. For many, this is a deja vu scenario happening, where prices are about the fall sharply back to yearly lows. Is this the case with Ether’s price?

Ethereum price-action breakdown

When Ether’s price managed to break the important psychological price of USD 500, we predicted in a previous article a price hike to higher highs, specifically to the USD 600 price area:

Today is the day we look back to this bullseye prediction and go on to set our next soft target, which is the psychological price of USD 600, previously marked as a very important area back in 2017.

CryptoTicker’s previous article on Ether’s technical analysis

The price reached a high of USD 620, then within a few hours, prices adjusted back to USD 480, an important price area already mentioned as well:

Sensible Stop-Loss levels would be around USD 445 to USD 485, depending on risk appetites for traders who are just entering the markets. A breakout below those price levels might result in temporary stagnant prices, awaiting further news advancements to lift the price back up.

CryptoTicker’s previous article on Ether’s technical analysis

ETH/USD 1-Hour chart, a crash from a 2 year all-time high
Fig.1 ETH/USD 1-Hour chart, a crash from a 2 year all-time high – TradingView.com

Was Ether’s crash a “normal” price adjustment?

Unlike Bitcoin, the price of Ether didn’t even reach half the price of its previous all-time high of USD 1,415. Its price was increasing in a normal uptrend since the Covid-crash earlier this year.

If we analyze solely the uptrend that happened so far this year, we can confirm a regular price adjustment. In fact, earlier in September, prices crashed similarly for 3 consecutive days, only to consolidate and bounce back stronger. Looking at the long black uptrend line in figure 2, we can see a normal uptrend pattern, delimited by two uptrend support and resistance. We didn’t even break or reach the uptrend support line!

ETH/USD 1-Day chart, showing the uptrend of ETH
Fig.2 ETH/USD 1-Day chart, showing the uptrend of ETH – TradingView.com

If prices fail to bounce back, and even break the lower uptrend channel, only then we can say there’s a trend reversal and maybe speculate whether the price entered a consolidation level or will turn to a bear market.

People comparing the current price retracement to 2017’s crash shouldn’t do so, because many things are at play today:

  • Eth2.0
  • DeFi
  • Staking
  • Genesis
  • Technicals – A normal and “healthy” uptrend

Again, stressing at the second point, a normal uptrend, driven by good news and fundamentals. In figure 3, we compare both uptrends, and we can see the level of price increases on a weekly basis.

ETH/USD 1-Week chart, 2017 vs 2020 uptrends
Fig.3 ETH/USD 1-Week chart, 2017 vs 2020 uptrends – TradingView.com

Should you buy Ether’s dip today?

Looking at figure 4, we perceive a further price adjustment, as a risky head and shoulders pattern emerges on the hourly chart of ETH. There are three scenarios at play:

  • Buy at today’s prices with 2 stop-loss levels depending on your risk appetite
    • USD 500
    • USD 445
  • Wait for the price to correct further and buy around 470 with a stop-loss level as the psychological price of USD 400
  • Wait for the price to consolidate until further notice, a stance we’d recommend. No need to rush and buy from now, as gains would be immaterial give or take $100.

ETH/USD 1-Hour chart, Head and Shoulders pattern formation
Fig.4 ETH/USD 1-Hour chart, Head and Shoulders pattern formation – TradingView.com

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Rudy Fares

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Ethereum Price Analysis
Ethereum Price Analysis© Cryptoticker
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