Technical Analysis and Market Entry: Ethereum Bears Break Out from Pennant Structure, Deeper Moves South Eyed

  • Ethereum price is firmly within the control of the markets bears, given critical technical breaches. 
  • ETH/USD has broken out to the downside from a bearish pennant structure, leaving the door open to more significant moves south. 

ETH/USD: Recent Price Behaviour

Ethereum price is being dictated mainly by the market bears, as it continues to remain weighted to the downside. It is running towards its second consecutive week in the red, as the price heads for a narrowing range breakout. ETH/USD has fallen some 10% during the noted period of decline, trading at the lowest level seen in four weeks. The price was dealt a harsh blow after a critically failed retest of a long-running ascending trend line.

The support had been providing needed comfort for the bulls from December 2018, before sellers forced a breach in August of this year. ETH/USD then dropped 17% over two weeks, before catching much-needed support. The buyers had swooped in within a known demand zone, $175 down to $155. Ethereum has not traded below this noted territory since April. 

A retest of the noted trend line came into play on the week of 16th September, before the being then attacked by the bears. It played out to the textbook with the breakout and retest of the support. The price has failed to maintain any upside momentum since late June. Rallies continue to be sold, following such an initially promising start to the year. 

ETH/USD weekly chart

Bearish Pennant Structure 

Over the last eight trading weeks, price action has been moving within consolidation mode. During this, tight conditions formed a bearish pennant structure, which contained ETH/USD from 25th September up until 14th November. A breach occurred on 15th November, forcing a strong breakout; the retest was then seen on 17th November. Since the noted retest underneath the pattern and rejection, further selling pressure has followed. 

ETH/USD daily chart

Trade Recommendation 

Given the above described bearish pennant breach, greater moves to the downside still appear to be favourable. An entry around the current market price still offers a reasonable potential opportunity, for a ride deeper to the south. In terms of targets; $160, $155, and then $105. Stops to be placed just above the pennant and strong daily resistance at $202. 

Disclaimer: The author owns Bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Author:
Ken has over 8 years exposure to the financial markets. During a large part of his career, he worked as an analyst, covering a variety of asset classes; forex, fixed income, commodities, equities and cryptocurrencies. Ken has gone on to become a regular contributor across several large news and analysis outlets.