Historical Bullish Cue Reappears For Ethereum (ETH), But Technicals Remain Bearish.
Recent Ethereum price action has been marked by heightened volatility, reflecting broader market uncertainties. As of late August 2024, Ethereumâs value against Bitcoin has been consistently downtrending, stirring concerns among investors.
The ETH/BTC pair has repeatedly tested crucial support levels. However, a decisive bullish response has been absent, fueling speculation about the potential for further downside.
A recent tweet by MichaĂ«l van de Poppe has captured the marketâs attention, suggesting a possible reversal based on a historical bullish divergence pattern.
ETH/BTC Bullish Divergence Hints at Potential Reversal
MichaĂ«l van de Poppeâs tweet highlighted a valid daily bullish divergence on the ETH/BTC chart, echoing similar patterns in Jan. 2021 and Sept. 2019. Historically, these divergences marked significant lows for Ethereum against Bitcoin, leading to notable rallies.
The tweet suggests that Ethereum could be on the brink of a significant upward movement if history repeats, potentially reversing the prolonged downtrend.
Ethereum might be looking at a bullish divergence with BTC. Source: X
Analyzing the current ETH BTC chart, the price action confirms a persistent downward trajectory, with ETH struggling to maintain support around the 0.0425 level. Despite this, a bullish divergence, where the price makes lower lows while RSI makes higher lows, signals a potential weakening in bearish momentum.
However, for this bullish setup to materialize, ETH/BTC must first clear the immediate resistance levels around 0.04622 and 0.0515. These levels have previously acted as strong barriers, and a failure to break above could invalidate the bullish divergence, reinforcing the bearish outlook.
On the contrary, a successful breakout could attract buyers, potentially triggering a rally towards 0.06047, as van de Poppeâs chart suggests.
Technical Pattern Gives Bearish Outlook For Ethereum
MichaĂ«l van de Poppeâs predictions aside, a technical setup, the âbear flag,â has some bearish cues for the ETH USD pair.
ETHUSD pair formed a bearish pattern with a 35% downside target. Source: Tradingview
The bear flag pattern appears on a cryptocurrency price chart when a brief, sharp countertrend movementâoften referred to as the flagâfollows a preceding downward trend. The formation typically signals a potential reversal of the countertrend.
Volume levels may stabilize or decrease during consolidation in a bearish continuation setup. During the consolidation period of a bear flag setup, the market often trends upward in response to the initial price drop, triggering FUD.
The emotional response typically results in higher-than-average trading volumes as investors and traders re-enter the market to capitalize on or mitigate the price movementâs effects.
Traders calculate the bear flag patternâs price target by subtracting the flagpoleâs length from the breakout price level. As a result, the ETH USD price might drop to $1,665, a 35% drop from the current price levels.
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