ETH bullish reversal candles are forming near a strong confluence of support levels, raising expectations of an impending sharp upward pullback.
Ethereum’s native token, Ether (ETH), appears to be poised for a sharp upward pullback in the coming weeks following the formation of a so-called “double doji” pattern accompanied by some bullish technical indicators.
Ether Strong Support Confluence Meets Dojis
Thus, a doji is a candle that is formed when a financial instrument opens and closes at approximately the same level in a given period of time, whether it be hourly, daily or weekly. From a technical point of view, a doji represents indecision in the market, i.e. balance of power between bears and bulls.
Thus, if the market moves down when the doji appears, traditional analysts see it as a sign of slowing selling momentum. As a result, traders may view doji as a sign of their existing short positions or take new long positions in anticipation of a price reversal.
Meanwhile, the double doji shows an ongoing conflict of bias among traders that could lead to price breakouts in either direction.
With ETH/USD forming a similar pattern on the weekly chart, the token appears poised to see strong trend-setting moves in the coming sessions.
A weekly ETH/USD chart showing two consecutive doji formations. Source: Trading View
Some of Ethereum’s technical readings point to a strong recovery, starting with its 200-week exponential moving average (200-day EMA; blue wave in the chart above) around $1,625 that emerged in May 2022 as a strong support level.
Ether then gets another specific price floor in the $1,500 to $1,700 range, which was instrumental in limiting the token’s bearish efforts between February and July 2021. Combined with the double doji, these technical indicators predict an imminent price rally.
Is the 50% ETH Rally Coming?
If the price of ETH rises as above, then the next bullish target would be the 0.5 Fibonacci line (around 2120) on the Fibonacci retracement chart drawn from the $85 swing low to the $4300 swing high.
Weekly ETH/USD price chart with Fibonacci support and resistance targets. Source: Trading View
This would mean a 20% move up. Meanwhile, a longer move above the 0.5 Fibonacci line could prompt traders to look to the 0.382 Fibonacci line near $2,700 as the next upside target, a level aligned with ETH’s 50-week EMA (red wave) coinciding with end of September 2022.
This will be an increase in prices by almost 50%.
Related: 3 Reasons Ethereum Price Is Below $2,000
Conversely, if the Double Doji pattern resolves on a break below the support area, it could push Ether towards $1,400. This level coincides with ETH’s 2018 high and was the benchmark for support in February 2021 as shown below.
Weekly ETH/USD price chart. Source: Trading View
A decisive break below $1,400 then opens the door to the 0.786 Fibonacci line near $1,000 as the next downside target.