Ethereum remains in a pivotal position as it moves into the typically low volume weekend, with it trading below the $400 level of resistance despite a 5.52% recovery over the past 24-hours.
The world’s second largest cryptocurrency also seems to be forming an ominous head and shoulders pattern, which is known to be a clear reversal signal.
A measured move if the head and shoulders pattern plays out would plunge Ethereum to as low as $325, with potential to slide even further depending on the amount of liquidated long positions on margin exchanges.
However, that would only be confirmed if the neckline is broken at $365, at which point the cryptocurrency market may be suffering a wider sell-off.
While the prospect of a bearish reversal edges closer, it’s worth noting that the pattern may well continue to play out for at least another week, in which time it will also likely test the level of resistance at $409.
If price reaches this level and is met with a spike in sell-volume it will likely be investors opting to open short positions at a previous point of rejection with downside price targets of $325.
If, however, Ethereum breaks above $409 it would invalidate the aforementioned head and shoulders theory while opening up a serious bullish case that would see it almost certainly topple it’s yearly high of $445.
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Ethereum was launched by Vitalik Buterin on July 30 2015. He was a researcher and programmer working on Bitcoin Magazine and he initially wrote a whitepaper in 2013 describing Ethereum.
Buterin had proposed that Bitcoin needed a scripting language. He decided to develop a new platform with a more general scripting language when he couldn’t get buy-in to his proposal.
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