Ethereum Faces 13% Drop Risk as Price Hits Key Resistance

Ethereum's price is currently approaching a critical resistance level that has historically acted as a barrier to upward price movements. This resistance zone, situated at $2,200, coincides with the upper boundary of a descending channel, a pattern typically associated with bearish trends. The price movements within this channel have shown lower highs and lower lows, indicating downward pressure. Analysts caution that if Ethereum fails to break above this resistance, it could trigger a downward correction, potentially pushing the price down to $1,700.

Crypto analyst MadWhale has shared a chart showing Ethereum trading close to this critical resistance. Previous interactions with this level have led to downward reversals. The analyst suggests that failure to break this zone may trigger a 13% decline, with the projected target being $1,700, a level that has previously served as support. This analysis is supported by the formation of a rounded top pattern near the resistance, which suggests that buying pressure is declining. Volume analysis reveals that trading activity is inconsistent, with low participation during recent gains and higher volume during declines.

Lower highs on the daily chart further support a potential downward continuation, a typical characteristic of bearish trends. Traders are advised to monitor for signs of increased selling pressure. Confirmation of a rejection, such as a bearish candlestick pattern or rising sell volume, could strengthen the case for a decline toward $1,700. According to the Moving Average Convergence Divergence (MACD), Ethereum is currently showing signs of waning bearish momentum as the MACD line is approaching a bullish crossover with the signal line. If this crossover occurs and is supported by increasing histogram bars, it could indicate a potential price rebound for the top altcoin.

While bearish indicators persist, some market observers maintain a positive view. Analyst Patron has outlined three possible bullish price targets. According to his analysis, if Ethereum holds support near $1,980, a short-term rally could occur. His initial target is $2,296, reflecting a potential increase of over 15%. Further upside targets include $2,913 and $4,000. These projections assume that current support holds and momentum shifts in favor of buyers. The analyst’s outlook is based on Ethereum price recovering from recent lows and reclaiming previous highs. This scenario would challenge the bearish narrative if confirmed by increased volume.

At the time of reporting, Ethereum is trading at $1,999.75, marking a 1.20% gain over the past 24 hours. Despite the price uptick, trading volume has dropped sharply by 37.37%, indicating a possible divergence. This divergence suggests that the recent price increase may not be supported by strong buying pressure, adding to the uncertainty surrounding Ethereum's near-term price movements.