After Monday’s drop, Ethereum (ETH) fell below key support levels and hit its lowest price since November. Still, several market watchers remain bullish and predict a massive rally for the cryptocurrency this quarter.
Ethereum drops to two-month low
Ethereum started the week with a significant correctionfalling from the weekend range to its lowest price in two months. Over the weekend, Ethereum hovered between $3,200 and $3,340 after recovering from last week’s lows.
In the middle of this performance, cryptanalyst Ali Martinez acute out that ETH’s most critical resistance was between $3,360 and $3,450, where 4.37 million addresses bought 6.47 million ETH. The analyst also noted that the cryptocurrency’s key support was between the $3,066 and $3,160 price range, where 4.12 million addresses had bought 4.9 million ETH.
Ethereum tested this support zone during the December corrections, and bounced from the zone after the pullbacks. However, the King of Altcoins fell below this key support for the first time since November 9, hitting $2,920 on Monday.
After a 12% retracement from the weekend highs, ETH tested its post-election breakout level, confirming the $2,900 price range as support. Ethereum quickly bounced off this level, rising 9% to the $3,100-$3,200 range.
Crypto investor Miky Bull considers ETH’s recent performance the “perfect setup for a massive turnaround.” The trader noted that this could be the reversal that leads to a breakout from Ethereum’s inverted head and shoulders pattern.
The second largest cryptocurrency by market capitalization has formed a multi-month inverse head and shoulders pattern, which noted by several analysts, with its left shoulder formed around the $2,800 price range.
Rekt Capital had suggested that “any pullback near the $3,000 level could see Ethereum develop a right shoulder.” Meanwhile, Miky Bull said the bullish setup was targeting the $7,000 mark.
ETH looks like 2021 trajectory
Analyst Crypto Bullet pointed out that ETH’s chart was similar to its 2021 behavior. The chart shows that Ethereum saw a Double Top pattern during its rally over three years ago. Then, the cryptocurrency fell below the key support zone at $3,100, confirming the pattern.
However, it regained this level after consolidating for two weeks, leading to a breakout to ETH’s all-time high (ATH). According to the analyst, Ethereum is repeating this pattern after yesterday’s fall, suggesting that the cryptocurrency’s “worst case scenario” would reach ATH levels again.
Daan crypto trader marked ETH’s historical performance at the beginning of the year, saying that “the percentages ETH is making in its first few weeks of the year are pretty crazy.”
Related reading
CoinGlass data shows that Ethereum recorded mostly negative weekly returns in the first few weeks of 2024 but started a 6-week positive streak as February approached. This could indicate that ETH’s negative performance could be reversed in the coming weeks. Nonetheless, Daan advised investors to look at quarterly returns for a better overview of seasonality.
At the time of writing, ETH is trading at $3,230, up 3% on the daily time frame.
Featured image from Unsplash.com, chart from TradingView.com
