Ethereum’s native token, Ether (ETH), is primed for a potential rally against Bitcoin (BTC) in the coming weeks due to positive ETH/BTC technicals and bullish divergences.
The main factor contributing to a potential ETH/BTC rally is the current falling wedge pattern. A falling wedge is a well-known bullish reversal pattern that occurs when the price forms lower highs and higher lows within two converging trendlines. The pattern is confirmed when the price breaks above the upper trendline and rises to a level equivalent to the maximum distance between the upper and lower trendlines. As of December 22nd, ETH/BTC is following a similar pattern and aiming 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 the current price levels.
However, veteran trader Peter Brandt disagrees and suggests that the falling wedge pattern could actually be a descending triangle, which is a bearish indicator. Descending triangles are considered negative continuation patterns in downtrends, which ETH/BTC has been in for the past 15 months. Brandt believes that if the price breaks below the lower trendline of the falling wedge, it could push the ETH/BTC pair down to 0.044 BTC, marking an 8.5% decrease from the current price levels.
On a longer-term perspective, the weekly chart indicates 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 the relative strength index (RSI) is showing higher lows, indicating a bullish divergence. This suggests that the downward momentum is weakening and a potential reversal to the upside may be imminent. Additionally, the price is hovering near a support confluence formed by a multiyear ascending trendline and the 0.048-0.052 BTC range. This confluence limits the downside prospects for ETH/BTC in the coming weeks and allows for a rebound towards the 200-week EMA (blue wave) near 0.057 BTC by New Year’s, which aligns with the previously mentioned falling wedge target.
However, it is important to note that this article does not provide investment advice or recommendations. Investing and trading always involve risks, and readers should conduct their own research before making any decisions.