Technical Update - Bitcoin and Ethereum confirming reversal pattern and downtrend Technical Update - Bitcoin and Ethereum confirming reversal pattern and downtrend Technical Update - Bitcoin and Ethereum confirming reversal pattern and downtrend

Technical Update - Bitcoin and Ethereum confirming reversal pattern and downtrend

Cryptocurrencies 2 minutes to read
Kim Cramer Larsson

Technical Analyst, Saxo Bank

Summary:  Ethereum and Bitcoin have formed Shoulder-Head-Shoulder top and reversal like patterns. Now broken bearish with 20% downside potential, but be aware of supports that can limit the downside

Ethereum ETHUSD closed yesterday below its Neckline in what seems like a Shoulder-Head-Shoulder (SHS) pattern although the left shoulder is a bit low. Ideally both shoulders should be roughly the same height.

Nevertheless, when ETHUSD broke below the Neckline a downtrend has been confirmed supported by RSI also closing below the 40 threshold i.e., in negative sentiment.
The lower rising trendline will offer some support but the SHS pattern indicates we could see a sell-off down to around 1,370.

(As a rule of thumb, the potential target is the price difference from the Head to the Neckline and subtract that from the Neckline break out price. Illustrated by the two vertical arrows). That price level is also around the March trough.
Support at around 1,703

For ETH to reverse this bearish outlook a close above 1,930 is needed i.e., above the right shoulder.

Source: Tradingview and Coinbase

Bitcoin BTCUSD has formed almost similar SHS pattern as ETH. However, the price action did break back above the Neckline after a bearish break, but BTC didn’t manage to break back above the 55 daily Moving Average and a new downtrend has been established supported by negative sentiment on RSI. 

Lower rising trendline is likely to be tested. The 200 daily Ma will also offer some support and is likely to limit the downside.
Support at around 28,845.

A close above 28,475 will reverse the bearish picture



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