Peter Brandt spots Ethereum head and shoulders pattern warns of potential price drops

Renowned trader Peter Brandt has identified a head and shoulders pattern on the Ethereum chart, signaling a likelihood of more price dips ahead.
Brandt’s observation comes as Ethereum (ETH) experiences a correction following a broader market downturn. This correction follows a recent surge in Ethereum’s price, pushing it to retest the crucial $3,900 level on June 5.
However, after the retest, bears seized control as Bitcoin (BTC), the leading cryptocurrency, also faced a price correction, causing Ethereum to drop to the lower end of the $3,500 range.
Despite the recent decline, Ethereum’s chart data indicates that it is still in an uptrend. Nevertheless, the formation of the head and shoulders pattern highlighted by Brandt suggests a potential reversal to the downside. This pattern typically precedes a significant drop in price, with the middle peak representing the head and the other two peaks representing the shoulders.
In Brandt’s analysis, Ethereum fell below the neckline at $3,501 today, although it recovered slightly to $3,540. However, it remains below the neckline. While Brandt acknowledges the formation of the pattern, he notes the uncertainty surrounding it, hinting at a possible invalidation.
If the pattern holds, Ethereum could see further price declines due to a bearish trend reversal. Knepala, a crypto analytical account, also points out that Ethereum lacks strength on the daily timeframe, citing various momentum indicators.
For instance, the Relative Strength Index (RSI), which gauges the strength of Ethereum’s price movements, has dropped sharply to 44 amid the price slump. This indicates high selling pressure and strong downward momentum.
In the derivatives market, Ethereum has seen a surge in trading volume and a decrease in long positions. According to Coinglass data, volume has surged by 156% to $28.35 billion, while the long/short ratio has fallen to 0.8965, signaling an increase in short positions as traders anticipate further declines.
At the time of writing, Ethereum is trading at $3,529, down 3.8% in the last 24 hours. ShayanBTC, a CryptoQuant author, notes that the Taker Buy Sell Ratio has dropped below 1, indicating aggressive selling pressure from bears. If this trend continues, ETH could face more downward pressure in the short term.
Disclaimer: This article is for informational purposes only and should not be considered financial advice. The opinions expressed are those of the author and not necessarily reflective of The Crypto Basic. Readers are advised to conduct their own research before making investment decisions, as The Crypto Basic is not liable for any financial losses incurred.