Ethereum has been trading in close tandem with Bitcoin in recent weeks, but this correlation showed some signs of degrading just a couple of days ago when the cryptocurrency rallied to highs of $410 while BTC remained stuck below $12,000.
This rally proved to be fleeting, however, as it was quickly followed by a massive influx of selling pressure that has since led it to decline below $390.
ETH is now showing some overt signs of weakness as its upwards momentum continues faltering.
This rocky price action has resulted in it forming what appears to be a head and shoulders (H&S) pattern.
There’s a possibility that this pattern will be confirmed in the near-term, as a break below its neckline around $380 is all it would take.
If confirmed, one analyst is noting that a move to $320 could be imminent.
Ethereum Shows Signs of Weakness as Selling Pressure Mounts
At the time of writing, Ethereum is trading down nearly 6% at its current price of $385. This marks a notable decline from daily highs of just under $410 that were set yesterday afternoon.
Today’s decline has been brutal for Ethereum, as the cryptocurrency’s price reeled down towards $380 before it was able to find some support that led it up to its current price.
If this downwards momentum pushes the crypto below this support level, it could be poised to see significant losses in the near-term.
That being said, bears may not have enough strength to degrade the buying pressure that sits here, as the previous attempt to break this level that was seen last week failed.
Where Ethereum trends in the coming hours will likely depend on Bitcoin, as the benchmark cryptocurrency is currently sitting just above its key support at $11,400.
This Bearish Pattern Could Cause ETH to See Major Downside
One analyst has been closely watching a head and shoulders pattern that Ethereum has been developing throughout the past several weeks.
This pattern will be confirmed if the crypto breaks below its neckline at $380, with the analyst putting forth a downside target of $320.
“Still watchin’ the H&S brew,” he noted while pointing to the chart seen below.
Image Courtesy of Josh Olszewicz. Chart via TradingView.
Because this highly bearish pattern is on the cusp of being confirmed, bulls must step up and slow Ethereum’s decline in the coming few hours.
Featured image from Unsplash. Charts from TradingView.