Ethereum has followed the general trend of Bitcoin and then the asset in recent weeks fell from the 2023 peak, as did the price of ETH. Following this price drop, a worrying pattern has appeared on the ETH chart known as a falling wedge pattern. This was brought to light by crypto analyst Alan Santana, who paints a bleak picture of what this could mean for Ethereum.
Ethereum’s falling wedge pattern is bearish
In the analysis on the TradingView website, Alan Santana explains that the appearance of this falling wedge pattern does not bode well for the Ethereum price. Apparently, the ETH chart had formed a perfect rising wedge, which eventually broke bearish. Considering all this, the crypto analyst explains that this shows that the Ethereum price is moving along with the rest of the crypto market in a “normal but rapid correction.”
The crypto analyst also supports his analysis with the Ethereum Moving Average Convergence/Divergence (MACD) indicator. In the chart shared by the analyst, there is a clear decline in the MACD on the daily chart, lending credence to the increasing bearish pressure on ETH.
Source: Tradingview.com
Moreover, even if we use the Relative Strength Index (RSI) on the daily chart, there is also a clear decline. The RSI has apparently already lost its trendline support and is now moving below 50. The simple fact suggests a turn towards the bearish direction for the cryptocurrency.
Santana explains that these indicators show that the trend towards a downward spiral is strong, especially since a double top pattern is already in place. “The volume continues to drop, the calm before the storm. Slowly, slowly down… Nothing happens, everything is fine, Boom!” the analyst warns.
ETH price above $2,200 | Source: ETHUSD on Tradingview.com
Price targets for ETH’s bearish formation
The chart in the analysis shows that the crypto analyst expects a drop of at least 20% for Ethereum after the double top formation. Now the chart shows the double top formation when the asset’s price briefly reached the $2,400 level last week.
After that, expectations have quickly gone in the opposite direction and as the formation plays out, the crypto analyst sees a drop from here to at least $1,800. If more downsides follow, Santana expects there will be more withdrawals that will end up somewhere around $1,600.
The Ethereum price is still hovering around $2,200 at the time of writing, indicating that bear pressure is still increasing. If things fail from here on out, Santana’s prediction could prove correct and ETH’s price could fall back to mid-October levels.
Featured image from Crypto Briefing, chart from Tradingview.com
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