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Ethereum price surges 50% against Bitcoin in a month — but there’s a catch

Ethereum’s native toke, Ether (ETH), has continued its bullish trend against Bitcoin (BTC) amid growing euphoria over upcoming network upgrade The Merge.

ETH at multi-month highs against BTC

On the daily chart, ETH/BTC surged to an intraday high of 0.075 on Aug. 6 after a 1.5% bullish move. Meanwhile, the pair’s gains were part of a broader recovery trend that started at 0.049 a month ago and amounted to about 50% gains.

ETH/BTC daily chart. Source: TradingView

The ETH/BTC rally has surfaced in part due to the merger that will see Ethereum switch from Proof-of-Work (PoW) mining to Proof-of-Stake (PoS).

Ethereum’s “rising wedge” suggests a sell-off

Technically, Ether is staring at potential interim losses as ETH/BTC draws a convincing rising wedge.

Rising wedges are bearish reversal patterns that occur when price is trending up within a range defined by two rising, converging trend lines. As a rule, they dissolve after the price breaks below the lower trend line to the maximum height of the structure.

ETH/BTC daily price chart with “rising wedge” breakdown. Source: TradingView

Furthermore, a falling Volume and Relative Strength Index (RSI) versus a rising ETH/BTC further increases risks of bearish divergence. This lends weight to the bearish wedge setup for a target of 0.064 BTC, or an 11% drop from today’s price.

Ether looks stronger against the dollar

Meanwhile, the technicals paint a better picture for Ethereum against the US Dollar. The potential of a 10% breakout for ETH/USD in August looks strong on a classic bullish reversal pattern.

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On a four hour chart, ETH/USD has formed what appears to be a “double bottom”. This pattern resembles the letter “W” due to two consecutive lows followed by a change in direction from downtrend to uptrend as illustrated below.

ETH/USD four hour price chart with “Double Bottom” breakout setup. Source: TradingView

Meanwhile, a double bottom pattern dissolves after the price breaks above its common resistance level and – as a rule of technical analysis – rises by the distance between the first floor and the resistance.

As a result, ETH could surge towards $1,940 in August, up 10% from today’s price.

The views and opinions expressed herein are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should do your own research when making a decision.

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