An analyst has charted out a “dream scenario” path that Ethereum could follow, based on a technical analysis (TA) pattern in its 3-day price.
Parallel Channel Could Chart Out What’s Next For Ethereum
In a new post on X, analyst Ali Martinez has talked about a dream trajectory that Ethereum could follow with respect to a Parallel Channel. The “Parallel Channel” here refers to a TA pattern that forms whenever an asset’s price trades between two parallel trendlines.
The upper line of the pattern is assumed to be a source of resistance, so tops can be likely to occur during retests of it. Similarly, the bottom level can provide support to the price, helping it to rebound.
Now, here is the chart shared by Martinez that shows the Parallel Channel that the 3-day price of Ethereum has been trading inside for the last few years:
As displayed in the above graph, Ethereum retested the upper level of the Parallel Channel earlier in the year, but found rejection at it. The asset has since slipped down and arrived near the line, sitting a distance equal to three-fourths the height of the channel from the lower line.
The analyst has noted that a dream scenario could be for ETH to find a rebound around here and smash past the $4,900 level, corresponding to the upper boundary of the Parallel Channel.
Generally, Parallel Channel breakouts signal a continuation of the trend in that direction. This means that a surge above a Parallel Channel’s resistance can be considered a bullish sign, while a fall under the support level may lead to bearish action.
Parallel Channel breakouts can be of the same length as the height of the channel. As Martinez has highlighted in the chart, if ETH can break past the $4,900 mark, it may go all the way up to $8,000, corresponding to this length.
For now, Ethereum is heading down, so it only remains to be seen whether its price will be able to find a rebound in the near future and retest the upper boundary of the Parallel Channel.
ETH isn’t the only cryptocurrency that has been following a Parallel Channel in its 3-day chart. As the analyst has pointed out in another X post, Solana has also been trading inside the same type of channel on this timeframe.
“Solana needs to reclaim $200 to confirm strength,” explained Martinez. “Only then a rebound to $260 comes into play.”
ETH Price
At the time of writing, Ethereum is trading around $3,700, down almost 11% over the last week.
Featured image from Dall-E, charts from TradingView.com
