Ether reached an all-time high around $4,867 earlier in November, only to plunge by nearly 20% a month later on rising profit-taking sentiment.
And now, as ETH’s price holds $4,000 as a key support level, risks of further selloffs are emerging in the form of multiple technical and fundamental indicators.
Ether appears to have been breaking out of a “rising wedge,” a bearish reversal pattern that emerges when the price trends upward inside a range defined by two ascending but converging trendlines.
Simply put, as Ether’s price nears the wedge’s apex point, it risks breaking below the pattern’s lower trendline, a move that many technical chartists see as a cue for more losses ahead. In doing so, their profit target appears at a length equal to the maximum wedge height when measured from the breakout point.
As a result, Ether’s rising wedge downside target comes out to be near $2,800, also near its 50-week exponential moving average (50-week EMA).
The bearish outlook in the Ether market has appeared despite its ability to bear the massive selling pressures felt elsewhere in the cryptocurrency market in recent weeks.
For instance, Bitcoin (BTC), the leading crypto by market capitalization, fell by 30% almost a month after establishing its record high of $69,000 in early November, much higher than Ether’s decline in the same period. That prompted many analysts to call Ether a “hedge” against Bitcoin’s price decline — also as ETH/BTC rallied to its best levels in more than three years.
But it does not take away the fact that Ether’s recent price rally has coincided with a decline in its weekly relative strength index (RSI), signaling a growing divergence between price and momentum.