Ethereum Head & Shoulders Pattern Breakdown: Can Bulls Reclaim Control?

[Ben Graham]

Ethereum’s recent price action on the 4-hour chart has led to the formation of a classic Head and Shoulders pattern that opens up the possibility of a deeper correction. After a relatively stable period around the $2,500 zone, Ethereum broke below a neckline support level as last week drew to a close. This raises the question of whether a bearish continuation is already in motion for the Ethereum price or if bulls still have a shot at regaining momentum in the new week.

Head & Shoulders Pattern Confirmed After Breakdown Below $2,480

The Head and Shoulders pattern, one of the most recognizable reversal formations in technical analysis, is now clearly visible on Ethereum’s 4-hour candlestick chart. This chart and the technical outlook were first shared on the TradingView platform by crypto analyst MelikaTrader94. The structure includes a left shoulder, a prominent head peaking above $2,700, and a right shoulder that topped near $2,650. The neckline, drawn around $2,480, was breached during Ethereum’s recent pullback to $2,380. This, in turn, shifted the short-term outlook toward the bearish side.

After the break, Ethereum attempted to reclaim lost ground and is currently retesting the neckline area. This retest around $2,500 is significant, as a failure to push back above this level significantly would likely validate the bearish setup and cause the Ethereum price to reverse downwards toward the next support zone.

According to the outlook from analyst MelikaTrader94, the price target from this Head and Shoulders breakdown before any notable rebound upward can occur lies between $2,200 and $2,250. 

Chart Image From TradingView: MelikaTrader94

Bulls Must Reclaim $2,650 To Invalidate Bearish Setup

A confluence of factors supports the $2,200 region as a likely landing zone. Not only is this level consistent with the measured move of the Head and Shoulders pattern, but it also aligns with an order block on May 9 during Ethereum’s rally above $2,000 at the time. This adds further technical relevance to the $2,200 to $2,250 range acting as a support zone.

However, the situation is not fully bearish yet. The path forward is clear but narrow for Ethereum bulls. The first step to invalidate the bearish setup is to reclaim the neckline around $2,500 decisively. Beyond that, breaking back above the right shoulder level around $2,650 would invalidate the Head and Shoulders pattern, and another pattern will most likely come into play. 

A successful bullish reclaim would not only nullify the bearish pattern but could also revive sentiment for another retest of the $2,700 to $2,800 zone, which corresponds to the peak of the head in the recently formed pattern. Until such a recovery occurs, the Ethereum price can quickly reverse downwards at any time.

At the time of writing, Ethereum is trading at $2,510.

Featured image from Unsplash, chart from TradingView