Ethereum eyes bounce back against Bitcoin, with ETH price showing a hidden bullish divergence

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Ethereum’s native token, Ether (ETH), has been declining against its leading crypto rival Bitcoin (BTC) since September 3.

Ether lost nearly 25% in value versus Bitcoin after peaking at 0.07955 BTC in September. As the top altcoin fell, it left a trail of lower highs and lower lows, creating an ascending channel.

Later on, ETH / BTC broke the channel to the upside on Saturday, raising expectations for a strong prolonged recovery trend. But a sell-off on Sunday and in the ongoing session had traders test the channel’s resistance trendline for support.

ETH price charts indicate bullish divergence

Sentiment increased Ether’s ability to get back into the bearish territory, as shown in the chart below.

ETH / BTC daily price chart with bullish divergence. Source: TradingView

At the same time, the formation of higher highs in the daily Commodity Channel Index (CCI) of ETH / BTC showed a hidden divergence from the pair’s downtrend. For the uninitiated, CCI is a momentum oscillator that measures an instrument’s deviations from its statistical mean to identify potential reversals.

“A hidden divergence is always an indicator of a possible trend reversal,” remarked Stefan Krecher, a Germany-based market strategist, adding that ETH / BTC could bounce back in the coming sessions even if the daily Relative Strength Index (RSI ) of the pair remains unchanged. not overbought. “

Krecher assumed that ether would hit its monthly pivot point at around 0.071586 BTC, almost over 8% of the current level. The upside target also coincided with the 0.618 Fib line (0.071505 BTC) on the Fibonacci retracement chart in the chart above.

On the flip side, a re-entry into the descending channel range risked sending ETH / BTC onto its range support trendline near 0.058238 BTC.

Ether price against the dollar

The bullish ETH / BTC price outlook appeared as Ether held $ 4,000 as solid support while rebounding above 2.6% on Monday. Meanwhile, Bitcoin’s price has fallen nearly 3.5% after setting a similarly strong floor near $ 60,000.

As a result, ETH / BTC only looked weaker because Bitcoin rebounded sharply than Ether against the US dollar. Nonetheless, the outlook for the Ethereum token looked bullish, as previously reported by Cointelegraph, with the help of an ascending triangle setup shown below.

ETH / USD daily price chart with ascending triangle setup. Source: TradingView

Ether broke out of the pattern on the daily timeframe, but with low trading volume, showing weakness in the price trend.

The cryptocurrency is now testing the upper trend line of the triangle as support for a bullish confirmation. Should a rebound ensue, the price could hit new record highs above $ 4,384, with the triangle setup target at $ 6,500.

ETH supply crisis

In addition, the supply of Ether tokens has declined after the London hard fork of the Ethereum network. Namely, the Ethereum Improvement Proposal 1559, which went live with the update, started burning ETH that it had previously paid to miners.

The data collected by WatchTheBurn shows that the Ethereum network has destroyed nearly $ 2.25 billion worth of Ether token since the London Hard Forks was launched.

Related: Altcoins break out even if Bitcoin price falls to $ 60,000

In addition, the Ethereum 2.0 deposit agreement has attracted more than 8 million ETH, putting it out of circulation for at least a year.

Total value put into the Eth2 smart contract. Source: CryptoQuant

In addition, regulated funds have increased their ether holdings from 2.43 million ETH in November 2020 to 4.08 million ETH today, which means increasing institutional demand.

The views and opinions expressed are those of the author only and do not necessarily reflect the views of Cointelegraph.com. Every step of investing and trading involves risk, so you should do your own research when making a decision.