Ethereum has been moving quite bullish, as evidenced by its upward Regression channel. On June 2, it made a higher high of 253.43 to, then, experience a sharp drop, from which it has recovered, creating a high near 247. But the level did not hold and is currently dropping from there on increased volume.
This movement is creating a potential head-and-shoulders pattern whose neckline is near the regression line (dotted). But the H&S pattern is not complete until it breaks and closes below the neckline. In the cases where that neckline is not crossed, it becomes just a continuation pattern in the form of a flag, pennant or triangle.
Also, after the breakout of the neckline, traders should not jump into it as if it were a sure thing. We have to make sure it is not a fake breakout. So we must wait for consolidation. Usually, that comes with a retracement to challenge the neckline breakout. If it succeeds and moves above it, then the pattern dissolves, and we should consider it as a continuation of the consolidation structure. If it bounced back down, then we will get our reversal signal and a potentially good entry.
In this case, if the neckline is pierced, ETH could find support at 228, and bounce from there towards the neckline. Once we get the real signal, we will see it drop to 220 and then to the bottom of the channel at 216. Our invalidation level should be set slightly above the neckline. Thus, the reward/risk factor should be about 1.5, which is good enough to trigger a short trade. I think we should consider a profit target at 220 since Ethereum is still in bull mode. Being conservative with counter-trend moves is a good policy; thus, keep your stop trailed and set it to break-even as soon as possible.
Finally, we must remember that this could be just a retracement and continuation. As said, ETH is in bull mode, so it may happen that this pattern does not get completed.