Ethereum Faces Key Resistance as TD Signal Flashes Sell

Technical analyst Ali Martinez has identified that Ethereum has been trading inside a Descending Channel for the last couple of months, a consolidation pattern characterized by price movement between two parallel downward-sloping lines. This pattern has defined ETH’s price action, with the lower boundary serving as support and the upper boundary acting as resistance. In late September, Ethereum found support at the lower level of this channel and rebounded upward, consistent with the typical behavior of parallel channels where the lower boundary provides buying interest.

Since that rebound, ETH has steadily climbed back toward the upper boundary of the channel. At the time of Martinez’s analysis, the cryptocurrency was retesting this critical resistance level, but has since pushed further, attempting to achieve a sustainable break above this barrier. This marks the third attempt Ethereum has made to break through this resistance in the past two months, making the current price action particularly significant for determining the asset’s near-term trajectory.

Compounding the technical challenge for Ethereum is the appearance of a TD Sequential sell signal. The TD Sequential indicator is designed to identify potential reversal points in an asset’s price through two distinct phases: setup and countdown. The setup phase counts candles of the same color up to nine, after which it generates a top or bottom signal depending on the candle colors.

According to Martinez’s analysis, Ethereum has triggered this signal after forming nine consecutive green candles, suggesting that the current bullish trend may be reaching a state of exhaustion. This technical warning comes at a precarious moment as ETH tests the upper boundary of its descending channel, creating a convergence of technical factors that could challenge the sustainability of the recent rally.

With Ethereum currently trading around $4,730, representing a nearly 13% gain over the past week, the cryptocurrency faces a critical juncture. Martinez warns that a rejection at the current resistance level could trigger significant downside movement. Based on the structure of the descending channel pattern, the analyst projects potential declines to $4,100 or even $3,780 if the current breakout attempt fails.

These projected levels represent declines of approximately 13% to 20% from current prices and align with key technical support areas within the descending channel framework. The lower boundary of the channel, which previously provided support in late September, would likely serve as the primary defense against more substantial declines, while the midline of the channel represents an intermediate support level.

The current technical setup places Ethereum at a crossroads where the outcome of this resistance test could determine the cryptocurrency’s direction for weeks to come. Market participants are closely watching whether ETH can maintain its position above the descending channel’s upper boundary or if the combination of resistance and the TD Sequential signal will prove too formidable for the current bullish momentum.