The formation of OBO on the Ethereum chart is sounding the alarms

Ether (ETH), the cryptocurrency on the Ethereum network, declined below support around $ 2,954.

$ 2,954 represents the neckline of the shoulder head shoulder formation. This level of support appears to form the basis of the three price spikes. The middle of these peaks (head) is higher than the other two peaks (shoulders).

It may interest you: What is the Shoulder Head Shoulders (H&S) training? What does TOBO (iH & S) mean?

A break below $ 2,954 indicates a trend reversal and ETH / USD could fall in the distance between the head and neckline.

The ETH / USD daily chart showing the head-to-shoulder pattern. Source: Peter Brandt

Peter Brandt, CEO of global trading company Factor LLC, shared the graph showing the formation on September 20 and warned that if the price of Ether falls below $ 2,954, it could fall as low as $ 2,000:

“I’m NOT saying believe that and I’m not shortening either, but like it or not, if you have Ether you have to deal with it. There is an OBO pattern here, successful or not.”

Ether corrected earlier this week as China’s indebted real estate sector began to affect both the crypto and traditional markets, dropping to $ 2,912 at time of translation.

Some analysts think that if the currency holds onto historical support levels, it could rebound. E.g anonymous analyst PostyXBTHe suggested that as long as Ether remains above $ 2,850, it is likely to rise.

According to the chart shared by PostyXBT, ETH / USD may retest $ 4,000 in the next few days.

ETH / USD weekly price chart presenting the history of the $ 2,850 level as support and resistance. Source: TradingView.com, PostyXBT

Another anonymous analyst, The Crypto MonkHe said the latest correction eliminated weak investors in the market and offered a buying opportunity for strong hands.

It may interest you: CEO of Galaxy Digital: “As long as Bitcoin remains above $ 40 thousand, I will not worry”

Brandt added that the drop in ETH / USD could be a bear trap. A bear trap is when an asset’s price performance falsely indicates that the uptrend has ended. In such a case, those who have a leveraged short position can take a big loss on the ETH / USD rally.

Opinions and views expressed here are solely those of the author and do not necessarily reflect those of Cointelegraph. Every investment carries risk. Do your own research before making a decision.

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