Ethereum's native token Ether (ETH) looks poised to extend its selloff this week as it wobbles near a key support level of $4,000.
ETH price dropped by over 5.50% on Dec. 6 to an intraday low at $3,913. In doing so, it slipped through upward sloping support that constituted an ascending channel that — more or less — appears like a bear flag, a bearish continuation setup.ETH/USD daily price chart featuring Bear Flag setup. Source: TradingView
Conservative traders typically spot bear flags when an instrument consolidates higher inside a parallel channel after a considerable price drop (called flagpole). They anticipate the price to break below the flag's lower trendline. And when it does, traders set their profit target by measuring the flagpole's height and subtracting it from the breakout level.
Applying the bull flag strategy to Ether's ongoing price trends, one can expect the cryptocurrency to drop towards $3,200 in the sessions ahead. Interestingly, the level is also near the 0.5 Fib line (~$3,264) of the Fibonacci retracement graph drawn from the $720-swing low to the $4,808-swing high.More confirmation needed
While the bear flag setup hints at more pain for Ether ahead, some analysts believe the Ethereum token still has more room to run to the upside.
For instance, PostyXBT, an independent market analyst, asked his massive follower-base on Twitter to turn attention to Ether's deep price wick from Dec. 4, underscoring how the cryptocurrency's sudden crash from near $4,240 to as low as $3,575 (data from Coinbase) was met by traders with an aggressive buying response.
"The weekly close above $4k means that ETH is one of the strongest looking coins out there," the pseudonymous analyst noted, adding that not many held the structure "despite the wick."ETH/USD weekly perpetual futures contract chart. Source: TradingView
Meanwhile, another popular analyst Crypto FOMO also referred to the Dec. 4 rebound as a reason...