After Monday’s drop, Ethereum (ETH) fell below key support levels and hit its lowest price since November. Nonetheless, several market watchers remain bullish, predicting a massive rally for the cryptocurrency this quarter.
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Ethereum Drops To Two Month Lows
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 pointed 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, bouncing 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 the 12% retrace from the weekend highs, ETH tested its post-election breakout level, confirming the $2,900 price range as support. Ethereum quickly bounced from this level, surging 9% to the $3,100-$3,200 range.
Crypto investor Miky Bull considers ETH’s recent performance the “perfect setup for a massive reversal.” The trader noted this could be the reversal that leads to a breakout from Ethereum’s inverse head and shoulders pattern.
The second-largest cryptocurrency by market capitalization has been forming a multi-month inverse head and shoulder pattern, as noted by several analysts, with its left shoulder formed around the $2,800 price range.
Rekt Capital had suggested that “any pullback close to the $3,000 level could see Ethereum develop a right shoulder.” Meanwhile, Miky Bull stated that the bullish setup targeted the $7,000 mark.
ETH Resembles 2021 Trajectory
Analyst Crypto Bullet pointed out that ETH’s chart resembled its 2021 behavior. The chart shows Ethereum saw a Double Top pattern during its rally over three years ago. Then, the cryptocurrency fell below the key support zone of $3,100, confirming the pattern.
However, it reclaimed this level after consolidating for two weeks, which led to the breakout to 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 be hitting ATH levels again.
Daan Crypto Traders highlighted ETH’s historical performance during the start of the year, stating that “the percentages ETH does within its first few weeks of the year are pretty crazy.”
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CoinGlass data shows that Ethereum registered mostly negative weekly returns in the first weeks of 2024 but started a 6-week positive streak as February approached. This could suggest that ETH’s negative performance could be reversed in the coming weeks. Nonetheless, Daan advised investors to look at the quarterly returns for a better overview of seasonality.
As of this writing, ETH is trading at $3,230, a 3% increase in the daily timeframe.
Featured Image from Unsplash.com, Chart from TradingView.com
