Ethereum Forms Bearish Pennant as $2,100 Breakout or $1,850 Breakdown Looms

ETH compresses near $2,000 as $2,100 and $1,850 define next major move.

Ethereum is trading at a key technical junction after a sharp pullback from recent highs. Price action on the daily chart now shows a tightening structure that could soon resolve with a decisive move. Market participants are watching closely as both derivatives data and on-chain metrics offer mixed signals. At the same time, short-term compression suggests volatility may return soon.

Bearish Pennant Puts Ethereum Under Pressure Despite Low Exchange Supply

Crypto analyst Ted Pillows says Ethereum is forming a bearish pennant on the daily timeframe following its drop from the $2,600 region to near $1,800. Price first printed a strong impulsive decline, then shifted into consolidation between converging trendlines. Usually, such formations often act as continuation patterns in downtrends.

$ETH is forming a bearish pennant here.

A daily close above $2,100 will invalidate this and could also push Ethereum towards the $2,400 level.

In case of a daily close below $1,850; ETH will dump to new lows. pic.twitter.com/xMZ8hVgfls

— Ted (@TedPillows) February 20, 2026

According to Pillows, a daily close above $2,100 would invalidate the bearish structure. A break at that level could open room toward $2,400. Failure to hold support, however, keeps downside risk intact. A daily close below $1,850 would likely confirm continuation and expose lower support zones near $1,700.

As per CryptoQuant data, Ethereum exchange reserves have declined steadily over two years. Figures show that balances dropped from above 22 million ETH to roughly 16.4 million ETH. And this slump continued even during recent weakness.

_Image Source: _CryptoQuant

The lack of a sharp rise in exchange balances suggests limited spot-driven selling. Large holders do not appear to be rushing funds onto exchanges. Any breakdown below $1,850 may therefore stem more from derivatives positioning than heavy spot distribution.

ETH Short Squeeze Possible Above $2,100, But ETF Demand Remains Soft

Aggregated futures data shows open interest peaked between $45 billion and $48 billion during late-2025 rally conditions. The correction that followed triggered a sharp collapse in positioning. Open interest now sits materially lower, indicating excess leverage has largely been cleared.

_Image Source: _TheBlock

Reset in leverage reduces the risk of immediate liquidation cascades. Light positioning also leaves room for new exposure to build. Rising open interest while price remains inside pennant could signal traders preparing for expansion in volatility.

Looking at Ether ETF flows on a monthly scale, flows have turned negative since late last year. And this trend has continued in recent months, suggesting weaker institutional appetite.

_Image Source: _SoSoValue

With this in mind, a sustained upside may require stabilization in ETF demand. A breakout above $2,100 could trigger short covering. Sustained strength toward $2,400 likely needs fresh capital coming back into the market. Without renewed inflows, upside may struggle to hold.

Meanwhile, lower timeframes show neutral momentum. Ethereum has traded between about $1,920 and $2,020 over the past five days. RSI sits near 59, rising from recent lows but not overbought. Buyers are active on dips, yet a strong breakout has not appeared.