Bitcoin (BTC) has broken to the downside after getting itself squeezed into a tight consolidation pattern, and Ethereum (ETH) has – somewhat disappointingly – broken down along with it on its ETH/BTC trading pair. This has resulted in hefty losses on the ETH/USD chart.
We start with the 4-hour chart, and we can see that ETH/BTC has dumped in sync with BTC/USD yesterday evening (UTC). The formation revealing itself here looks like a clear descending triangle – a bearish pattern, suggesting a breakdown. What’s more, this entire pattern comes at the end of a previous breakdown, looking altogether like a large bear flag (see below).
Buyers have stepped into to catch ether from breaking completely below this local support. A smaller bear flag could easily form here and presage a full break of local support.
This is perhaps surprising, because things had been looking decent for the ETH/BTC pairing. Ether has struggled for about two months to find a bottom on this chart, after breaking into price territory not seen since March 2017.
We see here on the 12-hour chart, for example, a small double bottom and bullish divergence on the RSI on a pair of recent lows. And here, it is not impossible that ether will stabilize at the current support level and put in a larger bull divergence. Another thing we can note here on the RSI is the absence of any strong hidden bear divergence – which at least does not suggest trend continuation (to the downside).
If we look at the ETH/USD daily, we see that price here took a licking due to the double damage of ETH/BTC falling along with BTC/USD falling. Ether has been caught here in a band of support, but there is not any impressive volume so far showing up to buy this dip.
Indeed, RSI performance here is also apathetic, and there is little here to convince us that the dip will not continue toward $140. There are no bull divergences to be found on the lows, although, again, there are also no hidden bear divergences to be found either.
All told, ether doesn’t look great. Market interest seems low, and the fact that ETH/BTC could not even manage a counter-BTC bump at a time when the indicators were suggesting strength, is cause for concern (unless you’re shorting, of course). However, if ETH/BTC can finally stabilize where it is, perhaps it can weather the storm. Buyers were quick to step in yesterday – they need to keep on doing.
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