Ethereum’s native token, Ether (ETH), is poised to see gains against Bitcoin (BTC) in the coming weeks, thanks to positive ETH/BTC technicals and bullish divergences.
The potential rally of ETH/BTC can be attributed to its current falling wedge pattern. This classic bullish reversal pattern occurs when the price creates lower highs and higher lows with two converging trendlines. The pattern is resolved when the price breaks above the upper trendline and rises to a level equal to the maximum distance between the upper and lower trendlines. As of December 22, ETH/BTC is trending within a similar pattern and is expected to break above its upper trendline. Depending on the breakout point, the pair could rise to the 0.056-0.059 BTC range by New Year’s, representing a 6-13% increase from current levels.
However, veteran trader Peter Brandt disagrees with this analysis, suggesting that the falling wedge pattern could actually be a descending triangle, which is a bearish indicator. Descending triangles are considered bearish continuation patterns in downtrends, which ETH/BTC has been in for the past 15 months. Brandt believes that a break below the falling wedge’s lower trendline could push the pair down to 0.044 BTC, an 8.5% decrease from current levels.
On a longer-term timeframe, the weekly chart suggests the possibility of a rebound by New Year’s and during the first quarter of 2024. The price of Ether is forming lower highs while its relative strength index (RSI) is making higher lows, indicating bullish divergence. This suggests that the downward momentum is weakening and a potential reversal to the upside may be on the horizon. Additionally, the price is near a support confluence consisting of a multiyear ascending trendline and the 0.048-0.052 BTC range. This limits the downside potential for ETH/BTC in the coming weeks and enables a rebound towards the 200-week EMA at around 0.057 BTC, which aligns with the previously mentioned falling wedge target.
However, there is a risk that the bears could push the ETH price below the support confluence, potentially causing it to crash to 0.036 BTC, a historically significant resistance level between August 2018 and September 2020.
It’s important to note that this article does not provide investment advice or recommendations. Readers should conduct their own research and make informed decisions when it comes to investments and trading.