Ethereum price dropped below the 100 Simple Moving Average (SMA) at $3,920 on December 17, unravelling a possible bearish forecast. The descending parallel channel chart pattern suggests that Ethereum could see an 8% drop. To invalidate the pessimistic outlook, ETH would need to overcome the 100-day SMA resistance.
Ethereum Price Could Drop To $3,515
ETH price is trading just above the middle boundary of the descending parallel channel around $3,877 as seen on the daily chart. A descending parallel channel is a significantly bearish chart pattern that suggests a continued bearish leg as long as the price of an asset remains within the confines of the falling channel.
For ETH, the descending channel chart pattern points to an 8% downswing from the current price to tag the lower boundary of the channel at $3,515.
The down-sloping moving averages and the position of the Relative Strength Index (RSI) indicator at 41.53 suggest that Ethereum is firmly in the hands of the bears, accentuating this bearish outlook.
Moreover, the downward movement of the Movign Average Convergence Divergence (MACD) indicator shows adds credence to ETH price bearish narrative.
ETH/USD Daily Chart
On the upside, the bearish thesis could be invalidated if ETH price overcomes the immediate resistance at $3,920 embraced by the 100 SMA. If this happens, Ethereum price may potentially undo the losses that began on December 01 by breaking out above the upper boundary of the prevailing chart pattern at $4,117.
However, any movement further could be inhibited by stiff resistance from $4,430 level and $4,337 where the 50-day SMA lies.
Ethereum bulls would need support from the wider market to overcome these hurdles which may see the ETH price pushed higher towards the peak of the descending parallel channel at $4,840 after which a move to discover new prices above the $5,000 will be the next logical move.
The position of the MACD above the zero line in the positive region adds credence to this bullish outlook.