Ethereum, based on technical indicators and upward momentum in the ETH/BTC pair, is in a good position to gain against Bitcoin in the coming weeks. One of the main reasons behind a potential ETH/BTC rally is the dominant falling wedge formation on the chart. So, what do the analyses show us? Let’s examine together.
Noteworthy Details in the ETH/BTC Pair
The falling wedge formation is known as a classic bullish reversal pattern that occurs when the price creates lower highs and higher lows between two converging trend lines. It works after the price breaks above the upper trend line and rises to a level equal in length to the maximum distance between the upper and lower trend lines.
As of December 22, the ETH/BTC pair is moving within a similar formation and is waiting for a breakout above the upper trend line. Depending on the breakout point, the pair could rise towards the 0.056-0.059 region by the new year, potentially increasing by 6% to 13% from current price levels.
However, experienced investor Peter Brandt disagrees, arguing that the aforementioned falling wedge formation could be a descending triangle, which is an indicator of a downtrend. Descending triangles are considered continuation patterns in downtrends, which the ETH/BTC pair has been experiencing for the last 15 months.
Therefore, Brandt suggests that a breakdown below the lower trend line of the falling wedge could push the ETH/BTC pair down by 8.5% to the 0.044 level from current prices.
Weekly ETH/BTC Chart Analysis
In addition, longer-term frame charts indicate the possibility of a recovery in the first quarter of 2024. For instance, while the Ethereum price is creating lower highs, the Relative Strength Index (RSI) on the weekly chart is making more significant lows, indicating a bullish divergence. This inconsistency suggests that the downward momentum is weakening and a potential upward reversal could be near.
Moreover, the price is also moving near a combination of support that includes a multi-year rising trend line and the 0.048 to 0.052 area. This confluence limits the ETH/BTC pair’s downward expectations in the coming weeks, enabling a recovery towards the 200-week EMA level (blue wave) near 0.057 by the new year, as well as the aforementioned falling wedge target.
Otherwise, bears will try to pull the Ethereum price below the support level, which could risk a drop to the 0.036 level, historically a significant resistance level between August 2018 and September 2020.
