Ethereum’s native token Ether (ETH) experienced a modest pullback on July 17 after hitting a confluence of critical technical resistance.
Merger-led Ethereum price breakout
ETH price fell 1.8% to $1,328 after struggling to overcome two strong resistance levels: the 50-day exponential moving average (50-day EMA; the red wave) and a line downtrend (black) serving as a price ceiling since May.
Previously, Ether increased by more than 40% from $1,000 on July 13 to over $1,400 on July 16. The jump appeared partly because of euphoria surrounding “the merger” scheduled for September.
Meanwhile, the appearance of a golden cross on Ethereum’s four-hour chart also bolstered Ether’s bullish sentiment among technical analysts.
#ETH/USD
We got a bullish cross between 200 and 50 4h moving average
Seeking more benefits locally pic.twitter.com/WnGY19khnK
— Albert III (@AlbertcryptoN) July 15, 2022
The price of ETH is at risk of being faked
Ether’s price rise of over 40% since July 13 also had its price break above a critical horizontal resistance which acts as a kind of “ascending triangle pattern.”
Ascending triangles are usually continuation patterns. But in some cases, ascending triangles may also appear at the end of a downtrend, thus leading to a bullish reversal.
Scott Melker, an independent market analyst, viewed ETH’s bullish exit from its dominant ascending triangle pattern as a sign that it would rally further. He said:
“A break above $1,284 should send prices flying, as there is almost no resistance up to $1,700.”
Ether has already moved above $1,284 and is in a breakout zone. Nevertheless, its close above the upper trendline of the ascending triangle did not accompany an increase in trading volumes. This suggests weakening bullish momentum, i.e. counterfeit.
Therefore, ETH price is likely to reverse towards the upper trendline of the triangle near $1,284 as support. ETH/USD could maintain its bullish bias if it rebounds from $1,284 with compelling volumes and breaks above the confluence of resistance as seen above.
Related: Lido DAO is the most ‘overbought’ since April, with LDO price up 150% in two weeks – what’s next?
Conversely, a break below $1,284 would risk reactivating the ascending triangle pattern with a bias in favor of the bears. As a result, ETH would be at risk of crashing to $750, according to a technical analysis rule shown below.
This means a 45% drop from current price levels.
The views and opinions expressed herein are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.