Ethereum (ETH) is in a strong descending channel since the beginning of the current market correction. The 4H chart above for ETH/USD shows us exactly how Ethereum (ETH) has found support at the bottom of the descending channel in the past and then rallied from there. It also shows us what happened at each point where Ethereum (ETH) failed to break the downtrend resistance of the descending channel. Ethereum (ETH) first ran into the downtrend resistance during the beginning of the correction. It lacked the strength to break the descending channel and was rejected towards the bottom of the channel. It found support in April and then went on to test the top of the descending channel again in May. It kept testing the downtrend resistance at multiple points in May but was eventually rejected. As we can see on the chart, the price began to drop sharply and finally found support at the bottom of the channel in September.
Since then, Ethereum (ETH) has successfully rallied upwards and is now expected to test the top of the descending channel again. However, this time there is a lot more at stake. If Ethereum (ETH) fails to break past the Fibonacci resistance at $300, which also happens to be the top of the descending channel, it risks falling to $100 or lower. If we analyze Ethereum (ETH)’s price action for every time it has run into downtrend resistance at the top of the descending channel, we will observe that it has never been a simple test and reject. In fact, Ethereum (ETH) has made multiple attempts at testing that downtrend resistance after the first attempt. In other words, if Ethereum (ETH) were to face rejection at the top of the descending channel, the process will have to extend till the end of the year until Ethereum (ETH) falls again. If it does fall from there, it risks falling below $100.
I’m sure there are a lot of people rooting for Ethereum (ETH) to fall below $100 not because they are shorting it, but because they want to buy more. There is a strong possibility why that may not happen. First of all, the 4H chart above for ETH/BTC shows the price of Ethereum (ETH) trading in a falling wedge against Bitcoin (BTC). This falling wedge extends to the beginning of this correction and has not been broken yet. As we can see on the chart, Ethereum (ETH) has run into a downtrend resistance against Bitcoin (BTC) inside the falling wedge. This means that Ethereum (ETH) is at a make or break point. Whatever happens with ETH/BTC on the above chart will have important implications on ETH/USD.
If Ethereum (ETH) breaks its downtrend resistance against Bitcoin (BTC), it will give a green signal to the bulls that the correction is over and the rally is about to begin. If Ethereum (ETH) fails to break the downtrend resistance against Bitcoin (BTC), it will give a red light to the bulls that the correction is not over yet and to proceed with cautions. This means that in case ETH/BTC breaks out of the falling wedge, ETH/USD has a high probability of breaking the descending channel after testing $300. On the other hand, if ETH/BTC fails to break out of the falling wedge at this point, it would mean that there is a very low probability that Ethereum (ETH) may break the downtrend resistance after testing $300 and that the price might be expected to fall lower in the weeks to come.