Ethereum traders say the ETH price is at risk of a deep correction to $1.6K

Ether's price is trading 25% above the eight-month low of $2,112 reached on August 5. The second-largest cryptocurrency by market capitalization rose 13 percent in the past seven days.

Despite this performance, analysts currently believe that downside risks remain for Ether (ETH).

“I certainly don't expect $ETH to break above $2800-$2900, but rather remain bound in that range for August and September,” McKenna, a partner at Areth Capital, wrote in an Aug. 15 post on X.

McKenna was referring to Ether's price action following a recent drop in ETH after market maker jump trading and fears of a global recession. ETH fell as much as 21% to set a swing low of $2,112 on August 5th before recovering to its current price of $2,651.

According to the analyst, Ether's rally to $2,750 on August 12 met strong resistance from the bearish congestion zone at $2,800. The price is currently “trading close to this offer” and McKenna said that he would not be too confident to go long on ETH from the current levels.

But ultimately, the regional movement below is to buy value.

Meanwhile, another analyst, Peter Brandt, said that Ether's price action presented two scenarios based on two chart patterns: a 5-month rectangle and a rising wedge. The first ETH price rose above $2,960, indicating a perfect long-term exit point.

The second view includes a rising wedge breakdown to continue the downward trend, Ether has dropped to $ 1,650, the target of the rectangle.

Independent trader John Morgan wrote in an Aug. 15 post on X that “Ethereum's funding volume and price decline will lead to a reversal.

Glassnode data shows that since early 2024, Ethereum's funding rates have been mostly positive, suggesting more expectations. However, the recent drop to $2,100 indicates a shift in market sentiment along with lower interest rates.

Generally, short positions are paying off long positions with negative cash flow, indicating the spread of bearish bets.

RELATED: Ethereum Supply Surges High, Surpasses 120M ETH

Ether's bear flag sets the price of ETH at $1,640.

According to data from Cointelegraph Markets Pro and TradingView, the price of ETH has fallen from a high of $3,400 on July 29, a 35.5% drop to a low of $2,116 on August 5. The price has since returned to $2,552.

Despite the recovery, a bearish flag can be seen on the daily chart, indicating the continuation of the downward trend.

Ether bulls are counting on support from the lower border of the flag at $2,540. A daily candlestick below this level indicates a decline from the chart formation to $1,640. Such a move would represent a 35.82% discount from the current price.

The Relative Strength Index (RSI) position around 37 indicates that market conditions are still in favor of the bearish side.

This article does not contain investment advice or recommendations. Every investment and business activity involves risk, and readers should do their own research when making a decision.