(ETH/USD) 1H Analysis — Classic Double Top Formation Signaling Bearish Reversal
Date Analyzed: May 2, 2025
Asset: Ethereum (ETH/USD)
Time Frame: 1 Hour (1H)
Chart Pattern: Double Top
Technical Bias: Bearish
Trade Type: Short Setup
🔍 Overview of Price Structure
Ethereum has formed a Double Top pattern, a well-established bearish reversal formation that often signals the exhaustion of bullish momentum and a potential change in trend direction. This pattern is particularly significant when it follows a strong uptrend—as seen in this case—marking an inflection point between supply and demand dynamics.
📌 Key Technical Features:
Initial Rally: Price surged upwards, creating a strong bullish impulse and reaching a peak around $1,890.
Top 1: First major rejection occurs at $1,890, showing signs of seller presence at that resistance level.
Pullback to Support: Price retraced toward $1,840, establishing a clear neckline (horizontal support zone).
Top 2: The second rally again failed to break through $1,890, forming the second peak—a critical sign of bullish exhaustion.
Break of Neckline: Price broke below the support level ($1,840), triggering the double top breakdown and initiating a bearish structure.
🧩 Pattern Analysis: Double Top
The Double Top is complete when:
Two peaks (tops) occur near the same resistance level.
Price breaks the neckline (support between the two peaks).
Confirmation is ideally supported by volume increase (not visible here but commonly checked).
This classic pattern is used to predict trend reversals, with a price target typically projected by measuring the height from the tops to the neckline, then subtracting it from the neckline breakdown point.
🎯 Trade Plan
Trade Component Level / Detail
Entry Below $1,840 (post-neckline break)
Take Profit (TP) $1,755 (based on measured move)
Intermediate TP $1,804.60 (near-term structure level)
Stop Loss (SL) $1,926 (above both tops)
📏 Target Projection (Measured Move):
Pattern height = Top ($1,890) – Neckline ($1,840) = $50
Target = Neckline ($1,840) – Height ($50) = $1,790
Extended target aligned with previous price action support: $1,755
🔧 Supporting Technical Indicators
Woodies CCI (Commodity Channel Index) is in overbought territory and showing signs of waning momentum.
Divergence between price and indicator adds to the bearish confluence.
📉 Trade Execution Notes
Aggressive Entry: Immediate short on neckline break with tight SL.
Conservative Entry: Wait for price to retest the neckline as resistance (pullback entry), increasing the probability of a successful setup.
Risk-Reward Ratio: ~1:2 or higher depending on the entry and stop-loss placement—considered favorable.
⚠️ Risk Management & Professional Tips
Never enter based solely on pattern; always confirm with structure and indicator support.
Ensure position sizing reflects account risk tolerance (typically 1–2% per trade).
If volume data is available, look for increased selling volume at neckline break for added confirmation.
Monitor for false breakouts; use candle patterns or retest behavior for verification.
🧭 Final Thoughts
This ETH/USD 1-hour chart presents a textbook Double Top pattern, offering a high-probability short opportunity if the breakdown confirms with momentum. As the market reacts to resistance rejection and support failure, traders should remain disciplined with entry, exit, and risk control strategies. The structure aligns well with classical technical analysis and could be a strong opportunity for intraday or swing traders.
Date Analyzed: May 2, 2025
Asset: Ethereum (ETH/USD)
Time Frame: 1 Hour (1H)
Chart Pattern: Double Top
Technical Bias: Bearish
Trade Type: Short Setup
🔍 Overview of Price Structure
Ethereum has formed a Double Top pattern, a well-established bearish reversal formation that often signals the exhaustion of bullish momentum and a potential change in trend direction. This pattern is particularly significant when it follows a strong uptrend—as seen in this case—marking an inflection point between supply and demand dynamics.
📌 Key Technical Features:
Initial Rally: Price surged upwards, creating a strong bullish impulse and reaching a peak around $1,890.
Top 1: First major rejection occurs at $1,890, showing signs of seller presence at that resistance level.
Pullback to Support: Price retraced toward $1,840, establishing a clear neckline (horizontal support zone).
Top 2: The second rally again failed to break through $1,890, forming the second peak—a critical sign of bullish exhaustion.
Break of Neckline: Price broke below the support level ($1,840), triggering the double top breakdown and initiating a bearish structure.
🧩 Pattern Analysis: Double Top
The Double Top is complete when:
Two peaks (tops) occur near the same resistance level.
Price breaks the neckline (support between the two peaks).
Confirmation is ideally supported by volume increase (not visible here but commonly checked).
This classic pattern is used to predict trend reversals, with a price target typically projected by measuring the height from the tops to the neckline, then subtracting it from the neckline breakdown point.
🎯 Trade Plan
Trade Component Level / Detail
Entry Below $1,840 (post-neckline break)
Take Profit (TP) $1,755 (based on measured move)
Intermediate TP $1,804.60 (near-term structure level)
Stop Loss (SL) $1,926 (above both tops)
📏 Target Projection (Measured Move):
Pattern height = Top ($1,890) – Neckline ($1,840) = $50
Target = Neckline ($1,840) – Height ($50) = $1,790
Extended target aligned with previous price action support: $1,755
🔧 Supporting Technical Indicators
Woodies CCI (Commodity Channel Index) is in overbought territory and showing signs of waning momentum.
Divergence between price and indicator adds to the bearish confluence.
📉 Trade Execution Notes
Aggressive Entry: Immediate short on neckline break with tight SL.
Conservative Entry: Wait for price to retest the neckline as resistance (pullback entry), increasing the probability of a successful setup.
Risk-Reward Ratio: ~1:2 or higher depending on the entry and stop-loss placement—considered favorable.
⚠️ Risk Management & Professional Tips
Never enter based solely on pattern; always confirm with structure and indicator support.
Ensure position sizing reflects account risk tolerance (typically 1–2% per trade).
If volume data is available, look for increased selling volume at neckline break for added confirmation.
Monitor for false breakouts; use candle patterns or retest behavior for verification.
🧭 Final Thoughts
This ETH/USD 1-hour chart presents a textbook Double Top pattern, offering a high-probability short opportunity if the breakdown confirms with momentum. As the market reacts to resistance rejection and support failure, traders should remain disciplined with entry, exit, and risk control strategies. The structure aligns well with classical technical analysis and could be a strong opportunity for intraday or swing traders.
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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.