Ethereum price eyes 15% upside as a giant inverse H&S pattern takes shape

Ethereum price could be poised for significant upside as it forms a bullish reversal setup, as inflows into spot Ethereum ETFs return after a week of downturn.

According to data from crypto.news, Ethereum (ETH) was trading at $3,113 at last check on Dec. 15 morning Asian time, down 8% since last Thursday and 37.1% from its all-time high reached in August this year.

The downtrend was led by a drop in network activity, profit-taking by investors, and risk-averse sentiment among investors surrounding macroeconomic concerns and massive liquidations that hit the broader crypto market.

However, there are underlying signs that suggest Ethereum could be entering a consolidation phase before a massive upside in the weeks ahead.

First, the supply of the asset held on centralized exchanges has dropped to a record low of 8.7%, the lowest since the network launched in mid-2015. This happened as more ETH went into staking, restaking, and digital asset treasuries (DAT) focused on accumulating it. Notably, Tom Lee-led Bitmine, the most prominent among them, bought another $73.2 million just yesterday.

Typically, when exchange balances drop lower, they tend to reduce sell-side pressure, which could support price appreciation if investor demand for the asset remains high.

Second, U.S. spot Ethereum ETFs have returned to inflows over the past week, drawing nearly $209 million after a week of outflows. Investors typically tend to go bullish on an asset when it attracts institutional demand.

Ethereum price analysis

On the weekly chart, Ethereum price appears to be forming a massive inverse head and shoulders pattern, which is often a precursor for a bullish reversal.

Simultaneously, Ether price has moved above the 50-day moving average, a crucial level, a break above which has led to strong rallies previously.

Furthermore, the relative strength index has been steadily pointing upwards, a telltale sign that buying pressure for the token is starting to return.

For now, the immediate target for Ether next lies at around $3,600, 15.65% higher than its current price. The level also aligns with the 61.8% Fibonacci retracement level, making it a key resistance area that traders would follow.

On the contrary, $2,760, which aligns with the 38.2% Fibonacci retracement level below, could act as the next major support level to keep an eye on if the price faces renewed selling pressure.