Ethereum’s recent attempt to break above the multi-month descending channel’s middle threshold of $2.6K has turned out to be a false breakout, leading to a notable rejection and sharp decline.

This pattern suggests a potential mid-term continuation of the downtrend toward the $2.1K support level.

By Shayan

The Daily Chart

Ethereum’s price action on the daily chart has highlighted a bull trap. Much like in late August, when ETH broke above the descending channel’s middle threshold only to be swiftly rejected, a similar pattern has unfolded recently.

After the price briefly surpassed the $2.6K resistance, it failed to maintain momentum and faced considerable selling pressure, resulting in a 15% drop. This failure to establish a higher high indicates sellers’ dominance in the market.

Now, the cryptocurrency is approaching a crucial support zone of around $2.1K, which aligns with a previous major swing low. It seems likely to enter a descending consolidation phase for the mid-term, gradually declining toward this key level.

The 4-Hour Chart

On the 4-hour chart, Ethereum’s inability to maintain upward momentum near the 0.5 ($2.6K) – 0.618 ($2.8K) Fibonacci levels triggered a bearish three-drive pattern.

This well-known reversal pattern and a bearish divergence between the price and the RSI indicator suggested that sellers were regaining control over the market. Consequently, Ethereum experienced a sharp decline, falling back toward the ascending flag’s lower boundary of $2.3K.

Currently, sellers aim to push Ethereum’s price below the flag’s lower boundary, which would likely begin a fresh bearish trend. If this breakout to the downside occurs, ETH’s next primary target would be the $2K psychological support. However, the $2.1K threshold remains buyers’ first line of defense.

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