‘Bear flag’ seen! – “Ethereum price may drop to $2,000”

Ether (ETH), the native token of the Ethereum network, has dropped by nearly 20 percent over the past three weeks, trading around $2,900 on April 19 to its lowest level in a month. Although it has since climbed above $3,000, further declines are possible in the near term according to traditional technical analysis.

The “bear flag” pattern in Ethereum price

The bearish continuation indicator, called a “bear flag”, works when price is consolidating within an ascending parallel channel after a strong downward move (this is called the ‘flagpole’). Once the price breaks out of the channel, it loses strength, about to fall further.

ETH’s price tumbled after testing the upper trendline of the bear flag on April 4 and now it is retreating towards the lower trendline near $2,700. If the pattern works, the price could drop further, with the target length equal to the height of the flagpole, as shown in the table below.

'Bear flag' seen! – “Ethereum price may drop to $2,000”

Daily ETH/USD price chart with a ‘bear flag’ pattern. Source: NewsOfFinance

As a result, the bearish pattern in Ether price risks retesting $2,000 in the second quarter.

Macro factors affecting ETH price

Ethereum’s correlation with both Bitcoin and traditional markets increased the downside risk.

The correlation coefficient between Ether and Nasdaq 100 reached 0.95 on April 19. A coefficient of 1 means that the two entities move together perfectly.

'Bear flag' seen! – “Ethereum price may drop to $2,000”

Nasdaq 100 correlation coefficient on the daily chart of ETH/USD. Source: NewsOfFinance

The Ether price has dropped by about 19 percent since the start of 2022. Meanwhile, Bitcoin tumbled along with equities and other risky markets after the Fed announced its aggressive interest rate decisions and a $9 trillion balance sheet reduction target.

Long-term bullish prospect

ETH’s decline is due to the feeling that there will be less cash available to buy risky assets.

Related: “Bitcoin price could drop to $30,000 in 2 weeks” – Analyst

However, speculators are hopeful about the long-term uptrend due to the “The Merge” protocol update, which will most likely be rolled out after June.

DoopleCash, an independent market analyst, said, “ETH is seeing selling pressure from those who want to make quick money during the Merge update” said and added:

We will find balance in time. I’m not interested in estimating the bottom, but I want to save as much as I can before I get there.

In addition, the decrease in the amount of Ether held by exchanges and the increase in the number of wallets with ETH in the time until the update process, and more and more ETH flow to the Merge smart contract day by day are striking.

Seeking Alpha analyst Kennan Mell says the way Ethereum ran shadow forks prior to the Merge update makes it more likely to be successful during the update. argued. This should reflect positively on investors who are ready to accumulate Ether, especially in the long term.

The views and comments expressed here are solely those of the author. It may not reflect the views of Cointelegraph. Every investment and trading involves risk. You should do your own research when making a decision.

Soruce : https://tr.cointelegraph.com/news/ethereum-price-bear-flag-could-sink-eth-to-2k-after-20-decline-in-three-weeks

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