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Following Monday’s decline, Ethereum (ETH) fell below key support levels and hit its lowest price since November. Nonetheless, several market observers remain optimistic, predicting a massive rally for the cryptocurrency this quarter.
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Ethereum Falls to Two-Month Low
Ethereum started the week with a significant correction, falling 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.
Amid this performance, crypto analyst Ali Martinez highlighted that ETH’s most critical resistance was between $3,360 and $3,450, where 4.37 million addresses purchased 6.47 million. ETH. The analyst also noted that key support for the cryptocurrency was between $3,066 and $3,160, where 4.12 million addresses purchased 4.9 million ETH.
Ethereum tested this support zone during the December corrections, bouncing out of the zone after pullbacks. However, the king of Altcoins fell below this key support for the first time since November 9, hitting $2,920 on Monday.
Following a 12% retracement from weekend highs, ETH tested its post-election breakout level, confirming the $2,900 price range as support. Ethereum quickly rebounded from this level, jumping 9% to reach the $3,100-$3,200 range.
Crypto investor Miky Bull sees ETH’s recent performance as “the perfect setup for a massive reversal.” The trader noted that this could be the reversal that leads to a breakout of Ethereum’s inverse head and shoulders pattern.
The second-largest cryptocurrency by market capitalization is forming an inverse head-and-shoulder pattern over several months, as noted by several analysts, with its left shoulder forming 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 is targeting the $7,000 mark.
ETH looks like 2021 trajectory
Analyst Crypto Bullet pointed out that the ETH chart resembles its behavior in 2021. The chart shows that Ethereum experienced a Double Top trend during its rally over three years ago. Then, the cryptocurrency fell below the key $3,100 support zone, confirming the trend.
However, it recovered this level after consolidating for two weeks, which led to the breakout of ETH’s all-time high (ATH). According to the analyst, Ethereum is repeating this pattern after yesterday’s drop, suggesting that the cryptocurrency’s “worst case scenario” would reach ATH levels again.
Daan Crypto Traders highlighted ETH’s historic performance at the start of the year, stating that “the percentages ETH got in the first few weeks of the year are pretty crazy.”
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Data from CoinGlass shows that Ethereum saw mostly negative weekly returns during the first weeks of 2024, but began a 6-week positive streak heading into February. This could suggest that ETH’s negative performance could be reversed in the coming weeks. Still, Daan advised investors to look at quarterly returns for better insight into seasonality.
At the time of writing, ETH is trading at $3,230, an increase of 3% on the daily time frame.
Featured image from Unsplash.com, chart from TradingView.com
