- Ethereum price has breached its ascending parallel channel, hinting at a descent.
- Investors should expect a steep correction to $2,000 if the immediate support level at $2,541 gives.
- A daily candlestick close above $3,000 will invalidate the bearish thesis for ETH.
Ethereum price looked like it was handling the May 5 FOMC crash well, but there have been unwanted developments over the last 24 hours. Essentially, things have worsened for ETH and a breakdown of a significant support level hints that a further downswing is likely.
Ethereum price recovery plans in shambles
Ethereum price action since January 22 has created two higher highs and three higher lows, which when connected using trend lines describe an ascending parallel channel.
As mentioned in previous articles, the last two times ETH tagged the ascending parallel channel’s lower trend line, there was a bullish reaction. Ethereum price rallied roughly 40% as a result.
However, due to the lack of bullish volatility in Bitcoin price, the third retest of the channel’s lower trend line on May 2 was weak. The FOMC crash on May 5 indicated that the sellers can easily overpower the buyers and can do that for a long time.
As a result, Ethereum price has shattered the setup, triggering a bearish breakdown. The $2,541 is the immediate and last line of defense for the smart contract token. A flip of this support into a hurdle will be fatal and trigger a 21% nosedive to $2,000.
ETH/USDT 1-day chart
While things are looking up for Ethereum price, a daily candlestick close above $3,000 will have overcome the 100-day SMA at $2,922, as a result, invalidating the bearish thesis for ETH. after this, Ethereum bulls need to set a higher high relative to the April 21 swing high at $3,186 before heading higher.
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