Recent trading activities reveal that Ethereum is approaching a key point in its trade as it forms a bearish triangle pattern, signaling a potential significant breakout. If the cryptocurrency breaks below the lower boundary of this triangle, it could lead to a keen decline toward the $2,160 target.

This article aims to provide readers with a detailed technical analysis of the Ethereum price action, highlighting the significance of the bearish triangle pattern that has emerged on the charts. It will also examine how this pattern indicates a potential move down towards the $2,160 support level.

Ethereum is up 2.11% over the past 24 hours to around $2,642, with a market capitalization of over $317 billion and trading volume of over $21 billion at the time of writing. ETH market capitalization increased by 2.32% and trading volume increased by 33.62%

Analysis of current price action within a bearish triangle

On the 4-hour chart, ETH price is currently trading below the 100-day uncomplicated moving average (SMA) and is approaching the lower boundary of a bearish triangle, with several bearish candles forming. This indicates a bearish sentiment in the market and suggests the potential for further price declines.

Additionally, analysis of the 4-hour Composite Trend Oscillator reveals that both the signal line and the SMA line are currently in the overbought zone, with the signal line trying to break above the SMA line. This suggests a bearish trend pressure is growing for cryptocurrency, which could potentially result in further price declines.

On the 1-day chart, Ethereum remains below the 100-day SMA and is approaching the lower boundary of a bearish triangle with a single bearish candle. Given the current price action on the daily time frame, it seems that the bearish momentum is rising, which could potentially lead to a price collapse.

Finally, the composite trend oscillator on the one-day chart also suggests the potential for a continuation of the downside move, with both the signal line and the SMA line being in oversold territory and showing no signs of crossing above them.

Potential Scenarios for Ethereum After Breakout

If Ethereum’s current trading activity leads to a breakout below bearish triangle, the price could continue to decline towards the $2,160 support level. Once the crypto asset reaches this level and breaks below, it could lead to further downside movement towards other lower levels.

However, if Ethereum fails to break below, it could start heading towards the upper boundary of the bearish triangle. If the cryptocurrency breaks above this upper boundary, ETH could continue to rally to test the $2,816 resistance range and possibly rise to challenge higher levels if the price outweighs this resistance.

Featured image from iStock, chart from Tradingview.com