The ETH-to-dollar dropped to $235.44 on Coinbase as on May 30, 2100, UTC after rallying for five weeks consecutively. The pair attempted a small pullback from its newfound intraday low, but could not extend it to cover the intraday losses. The price action, overall, appeared weak, indicating that Ethereum could continue its plunge to test new downside targets.
Ahead of the correction, the Ethereum price established its year-to-date peak at $288.77 on Coinbase. However, the level experienced a huge selling sentiment, probably due to day traders that might have exited their long positions to squeeze out a decent intraday profit. The price, therefore, came back to its prevalent bull pennant, as shown in the chart above.
Exploring the Bull Pennant
The Ethereum price fluctuated between a bull pennant formation ahead of testing $288.77-high. The price surge appeared like a breakout action which, according to the textbook definition of a bull pennant, could have pushed Ethereum as high as the height of the pennant's flagpole. In the chart above, that height is about $135-long.
But, as one can notice, the breakout turned out to be a fakeout. The Ethereum price came back inside the same bull pennant structure, indicating that it plans to continue its fluctuations inside the range. Ideally, the price should pursue the direction of its previous trend, which is bullish in Ethereum's case. Also, the next breakout to the upside, if accompanied by a rise in volume, should take the Ethereum price at least $135 higher. That could bring the ETH-to-dollar exchange rate close to $400.
Treating Pennant as Symmetrical Triangle
The bull pennant, as shown above, also fits the criteria of a symmetrical triangle formation — two converging trendlines with similar slopes. While the intra-range price action remains the same in both the technical patterns, the breakout scenario differs. In a symmetrical triangle formation, the breakout target becomes the height between the initial high and initial low. In the case of Ethereum, the height is about $65-long.
So, if the price break above the triangle resistance, while supported by a rise in volume, it would set a breakout target $65 higher from the point of the break, which could bring Ethereum close to $350.
Meanwhile, market fundamentals also support a bullish case, given the Ethereum network has witnessed a growth in the number of daily transactions in May. The last time Ethereum's network activity went high, it propelled the price towards $1,400 in January last year.
Click here for a real-time Ethereum price chart.