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| Assessing Ethereum's Potential for a Rally to $2,400 |
Ethereum is making headlines as it hints at a bullish trend in the first quarter of 2023. Between September 2022 and mid-March 2023, Ethereum's price action set up an inverse head-and-shoulders pattern, a technical formation with three distinctive swing lows. The setup indicates that Ethereum's price has triggered a breakout that could result in a rally for the smart contract token, despite the pressure from United States regulators.
The head-and-shoulders setup for Ethereum price forecasts a 37% upswing, determined by adding the distance between the right shoulder’s peak and the lowest point of the head and adding it to the breakout point at $1,636. Ethereum price breached the neckline at $1,636 on March 13 and flipped this hurdle into a support level. This move initiated the aforementioned rally for ETH to the theoretical target of $2,370.
However, if Ethereum price shows weakness and massive profit-taking, it could put the recent gains in jeopardy. If ETH produces a daily candlestick close below $1,636 and flips into a resistance level, it will invalidate the bullish thesis. In such a case, Ethereum price could revisit the $1,500 psychological level, where buyers can give the uptrend another go.
While the bullish setup shows potential for a rally to $2,400, the pressure from regulators remains a concern. United States regulators have been increasingly scrutinizing cryptocurrencies, including Ethereum. However, despite this, Ethereum continues to show resilience, indicating a strong investor sentiment towards the cryptocurrency.
Ethereum's price action has set up an inverse head-and-shoulders pattern, hinting at a bullish trend in the first quarter of 2023. While the potential for a rally to $2,400 exists, pressure from regulators and the possibility of profit-taking could jeopardize the recent gains.
