An analyst has explained how a pattern is forming on ethereum‘s 3-day chart that could indicate a drop towards $1,700 is coming.
ethereum Has Recently Formed a TD Sequential Sell Setup
in a new mail On X, analyst Ali talked about a sell signal that has taken shape on the 3-day chart of eth. The relevant technical indicator here is the “Tom Demark (TD) Sequential”, which is used to detect reversals in the price of any asset.
The metric is made up of two phases; a setup phase and a countdown phase. In the first, candles of the same polarity are counted to nine after a price reversal. Once the ninth candle is reached, the indicator signals a probable top or bottom for the asset (depending on whether the trend so far was up or down).
Once the setup is complete, the 13-candle countdown phase begins. At the end of these 13 candles, a possible reversal for the asset occurs once again.
ethereum has seen a strong rally recently, but according to the analyst, the cryptocurrency has finished the indicator setup phase, implying that the asset could be heading towards a period of downtrend.
The following chart shows this pattern in the 3-day price of the coin:
<img decoding="async" class="alignnone aligncenter" src="https://technicalterrence.com/wp-content/uploads/2023/11/Ethereum-Could-Decline-to-1700-Based-on-This-Pattern-Analyst.jpeg" alt="bitcoin TD Sequential” width=”2837″ height=”1581″ loading=”lazy”/>
Looks like the indicator is giving a sell signal at the moment | Source: @ali_charts on X
On the same chart, the analyst has drawn an ascending triangle pattern for ethereum. “Ascending triangles” are made up of two lines: one parallel to the x-axis drawn through price highs, while the other is formed by connecting higher lows.
Generally, the price feels resistance at the upper line and support at the lower one. A break of any of these lines suggests a continuation of the trend: bullish in the case of a rise above the first, while bearish in the case of the second.
From the chart, you can see that ethereum has recently been retesting the $2,000 to $2,150 zone, which lines up with the resistance level of this ascending triangle.
Therefore, it is interesting that eth TD’s sequential setup phase ended just as the coin found this line from which it was rejected in the past.
“A pullback from this resistance level could trigger a drop towards the hypotenuse of the triangle at $1,700, setting the stage for a possible continuation of the uptrend,” Ali explains.
However, the analyst also notes that the $2,150 level could be one to watch, as if the asset can see a 3-day candle close above this level in the coming days, the bearish outlook could be nullified.
eth Price
ethereum had risen above $2,100 recently, but the coin saw some pullback in the past day, a potential sign that the sell signal may already be in effect.
<img loading="lazy" decoding="async" class="alignnone size-medium aligncenter" src="https://technicalterrence.com/wp-content/uploads/2023/11/Ethereum-Could-Decline-to-1700-Based-on-This-Pattern-Analyst" alt="bitcoin price chart” width=”1534″ height=”869″/>
eth has registered a drop during the past day | Source: ETHUSD on TradingView
Featured image by DrawKit Illustrations on Unsplash.com, graphics by TradingView.com
