ETH price threatens to drop further despite recovering more than 20% in the past three days.
Ethereum’s native token Ether (ETH) is likely to crash in May as it forms a convincing “bearish pennant” structure.

ETH price up to $1500?
ETH price has been consolidating in a range defined by two converging trend lines since May 11th. Its sideways movement coincides with falling trading volumes, emphasizing the possibility of ETH/USD drawing a bearish pennant.

Bearish pennants are bearish continuation patterns, meaning that they resolve after price breaks below the structure’s lower trendline and then falls to the height of the previous move down (referred to as the flagpole).

Two-hour ETH/USD price chart. Source: Trade View
As a result of this technical rule, Ether risks closing below its pennant structure, after which further downward movement will follow.

ETH flagpole height is around $650. Thus, if the price breaks the pennant apex around $2030, then the bearish target of the structure will be below $1500, more than 25% below May 15 price.

sale, redemption
Interestingly, the bearish pennant profit target falls in the area that preceded the 250% price rally in the February-November 2021 session. Furthermore, the target is near Ether’s 200-day exponential moving average (200-day EMA; blue wave), currently at $1,600.

Ideally, a demand zone could encourage Ethereum traders to hoard tokens in anticipation of a sharp pullback to the upside.

Assuming this happens, the interim profit target for ETH price will likely be the multi-month downtrend line that served as resistance in the “downward channel” pattern, as illustrated in the chart below.

Weekly ETH/USD price chart. Source: Trade View
ETH is already recovering after testing the demand zone and the lower trendline of the falling channel as support. This could push ETH/USD to hit the upper channel trend line around $3,000, which is around 50% up from May 15 price by June.

Extended crash scenario
The worst-case scenario could be that ETH falls below the demand zone in 2022 due to macro risks and their impact on the cryptocurrency market.

Related: $1.9 trillion loss in crypto risks spreading to stocks, bonds focus on stablecoin Tether

Notably, Ether’s value is down more than 50% since the start of the quarter as investors reduce exposure to riskier assets like Bitcoin (BTC) and tech stocks in an environment of higher interest rates.

As Cointelegraph recently reported, anticipation of further stock market sell-offs could impact the cryptocurrency, hurting Ethereum, Bitcoin, Cardano (ADA), and others alike.

Ethereum’s correlation coefficient with the Tech Nasdaq 100 is 0.90. Source: Trade View
BOOX Research, financial blogger from SeekingAlpha, remains long-term bullish on Bitcoin, Ethereum and the broader crypto market, but believes a recovery could take several years. The excerpts are marked:

“While some adjustments from above may have just shaken off hot money, there is still a risk that deteriorating macroeconomic conditions will result in even larger losses.”

Source: CoinTelegraph

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