Ethereum price breaks out, when 2-month high versus Bitcoin – is the rally sustainable?
Ethereum’s native token Ether (ETH) has successfully avoided a bearish technical setup to reach a two-month high against Bitcoin (BTC).
The ETH award carries the flag invalid
The ETH / BTC pair invalidated the prevailing “bear flag” pattern after Ethereum developers announced on July 14 that their long-awaited switch to proof-of-stake (called the merger) would most likely take place in September.
ETH / BTC has risen more than 22% since the announcement, reaching 0.067, the highest level since 25 May. Furthermore, the pair’s sharp upward movement has pushed net reversal gains to 37% measured from June 13’s local bottom of 0.049.
Ether tests the key bending zone
Strong fundamentals led by the merger launch could cause ETH / BTC to pursue a run-up to the 0.072-0.076 range. This area was active as resistance in January and March-May. Therefore, it should serve as the next upside target for Ether bulls.
But there is a catch. In particular, ETH / BTC has shown signs of weakened upside momentum close to what appears to be a strong resistance convergence.
It includes a falling trend line resistance, a Fibonacci retracement line (close to 0.066 BTC) and a support-threaded resistance range (0.064-0.068 BTC range), as shown below.
In addition, ETH / BTC’s daily relative strength index, a momentum oscillator indicator, has crossed into so-called “overbought” territory, which indicates an increased risk of sale.
Related: ETH Traders Measure False Risks After 40% ETH Price Rally
Independent market analyst “Altcoin Sherpa” quoted a similar technical setup this July 18, noting that the ongoing ETH / BTC rally may be “unsustainable.”
$ ETHBTC: This is a strange diagram; super strong in the short term, but I guess this rally will be unsustainable. Really conflicting thoughts that this is the “bottom”; many FA factors come in w. merge. Maybe .075 is next time if this area is cleared. $ ETH #Ethereum pic.twitter.com/UyjsidVuP4
– Altcoin Sherpa (@AltcoinSherpa) July 18, 2022
In other words, ETH / BTC may see a reversal of 0.06 by September if the bending resistance zone holds for a decrease of 9.5%. The 0.06 BTC level also coincides with the 0.236 Fib line, as shown in the chart above.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trade involves risk, you should conduct your own research when making a decision.
