After failing to break through the $3,000 level, Ethereum (ETH) is now trying to hold a key support zone and stabilize around this area. Analysts warn that if the altcoin doesn’t soon reclaim this crucial resistance, it could risk falling to new multi-month lows.
Ethereum Forms a Head and Shoulders Pattern
Amid broader market volatility, Ethereum has been trying to hold the recently reclaimed $2,900 level as support, aiming to challenge higher resistance levels in the coming days. Over the past month, the cryptocurrency has traded within a range of $2,800 to $3,400, reaching a high of $3,447 nearly two weeks ago.
Since hitting that local peak, ETH has struggled to maintain the higher end of the range, dropping back toward the lower end during last week’s market correction. The altcoin is currently on track for its worst fourth-quarter performance since 2019, down 28.76%. It is also in negative territory for December so far, trading 1.3% below its monthly opening price of $2,991.
Some analysts caution that ETH’s downturn may not be over, as it appears to be forming a pattern that could signal further trouble. In a recent post, analyst Ali Martinez suggested that Ethereum began forming a head and shoulders pattern following the sharp corrections that pushed many cryptocurrencies to multi-month lows.
According to the chart, the left shoulder formed between late November and early December after a bounce from the $2,780 support. The head of the pattern formed during the mid-December rebound that led to the local high near $3,400. Now, with the price being rejected again from the $3,000 area, the right shoulder appears to be taking shape. This suggests ETH could drop to around $2,800 to complete the pattern.
Martinez noted that if the pattern is completed, it could trigger a potential 15% decline toward $2,400—a level not seen since the start of the third-quarter breakout.
Is ETH Price in Trouble?
Other market observers have echoed concerns, noting that Ethereum faces trouble after being rejected once again at the $3,000 barrier. Analyst Ted Pillows pointed out that ETH attempted to reclaim this level but failed, closing Monday around $2,948. He believes that if ETH doesn’t soon reclaim this key level, it could likely fall toward the $2,700-$2,800 support zone. Conversely, a daily close above $3,000 could set the stage for a rally toward $3,300.
Similarly, Sjuul from AltCryptoGems stated that Ethereum is “a bit in trouble after that nasty bearish deviation on top of the range.” He highlighted the altcoin’s rejection from the mid-December highs, which pushed the price back to the lower end of its one-month range.
Based on this, the analyst suggested that investors could expect “the same to happen on the lower band,” with the price potentially retesting the $2,600-$2,700 area and possibly dropping as low as $2,400 before bouncing back toward the range highs. However, Sjuul added that “bulls need to establish a proper uptrend here because losing $2,700 would be a negative sign.”
As of this writing, Ethereum is trading at $2,933, down 2.53% on the day.
Frequently Asked Questions
Of course Here is a list of FAQs about the topic Ethereum Faces More Pressure Head And Shoulders Pattern Points To Drop Toward 2400 designed to be helpful for both beginners and more experienced traders
Beginner Definition Questions
1 What is a Head and Shoulders pattern
Its a chart pattern that technical analysts use to predict a potential trend reversal from bullish to bearish It looks like a human silhouette with a peak between two smaller peaks
2 Why does this pattern suggest the price might drop
The pattern shows that buying pressure is weakening Each attempt to push the price higher fails at a lower point after the head indicating sellers are gaining control A break below the neckline confirms the bearish signal
3 What does 2400 refer to
That is the price target in US dollars where some analysts believe Ethereums price could fall to if the Head and Shoulders pattern is confirmed and the selloff continues Its a projection not a guarantee
4 Is this a guaranteed prediction that ETH will drop to 2400
No Technical analysis patterns like this are not guarantees they are probabilities based on historical price behavior They indicate a higher risk of a downward move but news market sentiment or major events can always override a chart pattern
Intermediate Market Impact Questions
5 What would confirm this Head and Shoulders pattern
Confirmation typically happens when the price of Ethereum closes below the neckline support level on significant trading volume A break below without strong volume is considered a weaker signal
6 If I own ETH should I sell immediately because of this pattern
Not necessarily based on one pattern alone Its a warning sign of increased downside risk You should consider it alongside your investment strategy risk tolerance other market factors and any fundamental news about Ethereum
7 Could this just be a false signal or trap
Yes This is often called a bear trap The price might dip below the neckline trigger stoploss orders from fearful traders and then reverse sharply higher Thats why analysts look for a sustained break with high volume for confirmation