The native Ethereum token, It took just two months for Ether (ETH) to recover from a brutal sell-off in early 2022.
ETH price breaks to the upside, but risks remain
The price of ETH hit close to $3,350 on March 28 after rising more than 30% in just two weeks, and more than 50% if measured from its year-to-date low of around $2,160, set on March 24. from January.
In doing so, The ETH/USD pair may also have “broken” what previously appeared to be a bearish continuation setup, called a “symmetrical triangle”.
“Broken patterns (when the breakout is in one direction only to see price reverse and break in the opposite direction) often result in strong moves”writes Tom Bulkowski, a veteran market analyst. This raises hopes that Ether could rally to the triangle pattern target near $4,000 in the coming days.
The risk of the “double break”
However, the market analyst also points out that symmetrical triangles have a tendency to “double break”, in which the final direction of the break turns out to be the same as the original.
A double breakout scenario means that Ether’s uptrend could soon run out, leading to a pullback to the top of the symmetrical triangle. The downside outlook comes as ETH retests its support-turned-resistance range that served as a selling area for traders in the Jan-Feb session, as shown in the graph below.
As a result, another sell near the range could trigger double breakout risks, causing Ether price to drop towards the symmetrical triangle bearish target near $1,800, set after measuring the widest distance between the upper and lower trendline of the triangle and add it to the breakpoint.
Curiously, the $1,800 level was instrumental in curbing Ethereum’s bearish attempts during the sell-off that occurred in May-July 2021.
Conversely, the double breakout setup will be invalidated if the price breaks decisively above the resistance range. PostXBT, an independent market analyst, further noted that If levels around $3,350 become support again, it could increase ETH’s chances of hitting $4,000.
$ETH 1W
Decent pump but ETH still at weekly resistance. A little cautious and would like to see a bit more here.
Flip ~$3,350 and then we can discuss the possibilities of $4k again. pic.twitter.com/zNWqVMRtsg
— Posty (@PostyXBT) March 28, 2022
ETH 1W. It was a decent drop, but ETH is still at weekly resistance. I am a bit cautious. I’d like to see a little more here. When the ~$3,350 level is broken, we can discuss the chances of it going to $4,000 again.
The catalysts to the rise of Ethereum
The start of Ether’s 30% rally coincided with the merger of the Ethereum Beacon Chain with the Kiln testnet, signaling that its blockchain would go fully proof-of-stake by summer 2022.
Speculators have been waiting for Ethereum to move to ETH 2.0 for a long time, as the update promises to offer cheaper and more efficient transactions.
In theory, would come about by giving network participants “carrot and stick” incentives to collaborate, in which they would be required to block, or “stake” 32 ETH for 18 months to become validators. In exchange, they would receive annual returns in the same token.
As a result, Many analysts predict that the price of Ether will rise as the supply decreases, especially if the demand stays the same or continues to increase.
On the left you see the promised dilution of the Premine. On the right what was fulfilled. Ether supply will decrease after PoS. Think very carefully what this unfulfilled promise and the disguised whales of the Ethereum presale mean for Ethers future, its Proof of Stake & Web3.. pic.twitter.com/kaMgrs23hq
— stefan huber.justice (@Leerzeit) March 25, 2022
On the left is the promised dilution of Premine. On the right what was fulfilled. Ether supply will decrease after the PoS. Think hard what this broken promise and the disguised whales of the Ethereum presale mean for the future of Ether, its Proof of Stake and Web3.
Simultaneously, Ether still faces downside risks due to its strong correlation with the US stock market and Bitcoin (BTC). As previously reported, BTC’s correlation with equities is being watched closely this week as the BTC/USD pair challenges key resistance areas.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, so you should do your own research when making a decision.
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