🟢 Ethereum (ETH/USD) – Bearish Reversal Setup from Rising Wedge on 2H Chart
🧠 Overview: What the Chart Is Showing
The chart presents a bearish trading opportunity on Ethereum (ETH/USD), identified on the 2-hour timeframe. The market structure reveals a Rising Wedge, which is a reversal pattern that typically forms at the end of a bullish move. Ethereum is showing signs of weakening momentum within this wedge, indicating that a potential breakdown and trend reversal could be imminent.
🧱 Key Structural Elements
🔹 1. Support & Resistance Zones:
Resistance: The upper purple zone around $1,650 is a key resistance level where price previously failed to break higher. This level aligns with earlier rejection points and confirms supply.
Support: The horizontal purple zone near $1,480–$1,500 acted as a strong base and bounce area historically. This is the projected target area after breakdown.
🔹 2. Rising Wedge Formation:
Price is trading inside two ascending and converging trendlines.
Each new high is marginally higher, but lacks strong follow-through.
Lower trendline is repeatedly tested, suggesting weakening bullish strength.
🔹 3. Multiple Rejections (Yellow Circles):
Highlighted areas of rejection indicate that buyers are consistently losing power.
These failed attempts to break higher reflect distribution, a phase where smart money exits positions.
📉 Bearish Scenario Explained
The pattern suggests a classic bearish divergence where the price makes higher highs, but internal momentum (RSI, MACD – not shown but likely) weakens.
Rising wedges often act as bull traps, luring in late buyers before a sharp selloff.
Upon breaking the lower wedge trendline, we anticipate:
First Target (TP1): $1,533.4 – a minor support level and the first zone of interest.
Second Target (TP2): $1,460.8 – aligns with previous horizontal support.
🛠️ Trade Setup Details
Aspect Value / Zone
Pattern Rising Wedge
Timeframe 2-Hour (Short-Term)
Direction Bearish
Entry Trigger Break and retest of wedge support (~$1,620)
Stop Loss (SL) $1,810.7 – above swing high and wedge top
Take Profit 1 (TP1) $1,533.4
Take Profit 2 (TP2) $1,460.8
Risk/Reward Ratio High – favorable trade conditions
🔍 Price Action Psychology
Buyer Exhaustion: As price ascends within the wedge, buying pressure fades, indicated by smaller-bodied candles and less aggressive highs.
Trap Setup: This is a textbook environment for bull traps, where late buyers get caught just before a breakout fails.
Smart Money Activity: Larger players often wait for the breakdown before pushing price down to more attractive demand zones (TP areas).
📚 Educational Insight: Why Rising Wedges Work
Rising wedges are contrarian patterns – they form when the market seems bullish but internally weakens.
The upward slope gives an illusion of strength, but the narrowing range and loss of momentum signal fragility.
These patterns work best when:
There is strong preceding trend (here: bearish before the wedge).
The wedge forms at key resistance (which is true in this case).
Volume fades during the pattern, then spikes at breakdown.
📌 Conclusion: What's Next?
This setup presents a high-probability short opportunity in ETH/USD with well-defined technicals:
A clear bearish pattern (rising wedge)
Strategic entry, stop-loss, and take-profit levels
Strong confluence with support/resistance zones
If the wedge breaks decisively to the downside, this trade has potential for 200+ points of profit, with minimal risk exposure.
🧠 Overview: What the Chart Is Showing
The chart presents a bearish trading opportunity on Ethereum (ETH/USD), identified on the 2-hour timeframe. The market structure reveals a Rising Wedge, which is a reversal pattern that typically forms at the end of a bullish move. Ethereum is showing signs of weakening momentum within this wedge, indicating that a potential breakdown and trend reversal could be imminent.
🧱 Key Structural Elements
🔹 1. Support & Resistance Zones:
Resistance: The upper purple zone around $1,650 is a key resistance level where price previously failed to break higher. This level aligns with earlier rejection points and confirms supply.
Support: The horizontal purple zone near $1,480–$1,500 acted as a strong base and bounce area historically. This is the projected target area after breakdown.
🔹 2. Rising Wedge Formation:
Price is trading inside two ascending and converging trendlines.
Each new high is marginally higher, but lacks strong follow-through.
Lower trendline is repeatedly tested, suggesting weakening bullish strength.
🔹 3. Multiple Rejections (Yellow Circles):
Highlighted areas of rejection indicate that buyers are consistently losing power.
These failed attempts to break higher reflect distribution, a phase where smart money exits positions.
📉 Bearish Scenario Explained
The pattern suggests a classic bearish divergence where the price makes higher highs, but internal momentum (RSI, MACD – not shown but likely) weakens.
Rising wedges often act as bull traps, luring in late buyers before a sharp selloff.
Upon breaking the lower wedge trendline, we anticipate:
First Target (TP1): $1,533.4 – a minor support level and the first zone of interest.
Second Target (TP2): $1,460.8 – aligns with previous horizontal support.
🛠️ Trade Setup Details
Aspect Value / Zone
Pattern Rising Wedge
Timeframe 2-Hour (Short-Term)
Direction Bearish
Entry Trigger Break and retest of wedge support (~$1,620)
Stop Loss (SL) $1,810.7 – above swing high and wedge top
Take Profit 1 (TP1) $1,533.4
Take Profit 2 (TP2) $1,460.8
Risk/Reward Ratio High – favorable trade conditions
🔍 Price Action Psychology
Buyer Exhaustion: As price ascends within the wedge, buying pressure fades, indicated by smaller-bodied candles and less aggressive highs.
Trap Setup: This is a textbook environment for bull traps, where late buyers get caught just before a breakout fails.
Smart Money Activity: Larger players often wait for the breakdown before pushing price down to more attractive demand zones (TP areas).
📚 Educational Insight: Why Rising Wedges Work
Rising wedges are contrarian patterns – they form when the market seems bullish but internally weakens.
The upward slope gives an illusion of strength, but the narrowing range and loss of momentum signal fragility.
These patterns work best when:
There is strong preceding trend (here: bearish before the wedge).
The wedge forms at key resistance (which is true in this case).
Volume fades during the pattern, then spikes at breakdown.
📌 Conclusion: What's Next?
This setup presents a high-probability short opportunity in ETH/USD with well-defined technicals:
A clear bearish pattern (rising wedge)
Strategic entry, stop-loss, and take-profit levels
Strong confluence with support/resistance zones
If the wedge breaks decisively to the downside, this trade has potential for 200+ points of profit, with minimal risk exposure.
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Related publications
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.