Bear Pennant Formation Points to $1,100 ETH Target: Complete Analysis
Technical analysis reveals a bear pennant formation on Ethereum's daily chart, combined with declining onchain metrics, pointing toward a potential move to $1,100. Could such a decline present a once-in-a-generation buying opportunity?
The Ether (ETH) price action has formed a bear pennant pattern on its daily timeframe, a technical chart structure commonly linked to sustained bearish momentum. This deteriorating technical configuration, combined with decreasing activity across the network, could indicate the persistence of ETH's downtrend and potentially drive the cryptocurrency's value toward $1,100.
The bear pennant represents a continuation pattern characterized by price consolidation within an upward-sloping triangle structure that emerges in the aftermath of a significant downward price movement.
The pattern's resolution occurs when price action breaches the pennant's lower boundary trendline, currently positioned around $1,950. Should this breakdown materialize, the ETH/USD trading pair stands to decline by a distance equivalent to the preceding downward move's magnitude. This technical projection establishes a measured price objective for ETH at $1,100, representing a 43% decrease from present levels.
Cryptocurrency analyst Crypto Patel indicated that the ETH price must maintain support above the $1,800 level to nullify the bearish pennant formation.
Ethereum's declining network activity signals downward pressure
The weakness in Ether's price is further validated by deteriorating onchain metrics, as Ethereum's daily transaction volume fell to 1.95 million on Wednesday, representing a 33% decline from the 2.9 million transactions recorded on Feb. 5.
A comparable steep reduction in Ethereum's daily transaction volume occurred during January 2024, which coincided with a 30% decline in the cryptocurrency's market value.
The reduction in network engagement on Ethereum becomes further apparent through examination of the total value locked (TVL) within the platform's smart contract ecosystem.
The TVL on Ethereum decreased to $54.5 billion on Wednesday, down from $70 billion recorded at the month's start, marking a reduction exceeding 22% within a span of slightly more than two weeks.
Additional bearish indicators encompass a 26% reduction in deposit activity on the Uniswap decentralized exchange (DEX) alongside a 35% contraction on both Ether.fi and EigenLayer platforms.
Trading volume across Ethereum-based DEXs experienced a dramatic collapse to $1.5 billion from $3.72 billion during the identical timeframe.
Furthermore, worldwide Ethereum investment products recorded combined net outflows totaling $85.1 million during the period spanning Feb. 9 through Feb. 13, contributing additional momentum to the downward price trajectory.