Ethereum price breaks out, hits 2-month high versus Bitcoin — is the rally sustainable?
Ethereum’s native token Ether (ETH) has successfully avoided a bearish technical setup to reach a two-month high against Bitcoin (BTC).
ETH price bear flag invalidated
The ETH/BTC pair invalidated its prevailing “bear flag” pattern after Ethereum developers announced this July 14 that their long-awaited switch to proof-of-stake (called the Merge) will most likely occur in September.
ETH/BTC has rallied by more than 22% since the announcement, reaching 0.067, its highest level since May 25. Furthermore, the pair’s sharp upside move has pushed its net retracement gains to 37% when measured from June 13’s local bottom of 0.049.
Ether tests key inflection zone
Strong fundamentals led by the Merge launch could have ETH/BTC pursue a run-up toward the 0.072-0.076 area. This range was instrumental as resistance in January and March-May. Therefore, it should serve as the next upside target for Ether bulls.
But there’s a catch. Notably, ETH/BTC has been showing signs of a weakening upside momentum near what appears to be a strong resistance confluence.
That includes a falling trendline resistance, a Fibonacci retracement line (near 0.066 BTC), and a support-turned-resistance area (the 0.064-0.068 BTC range), as shown below.
In addition, ETH/BTC’s daily relative strength index, a momentum oscillator indicator, has crossed into so-called “overbought” territory, suggesting elevated risks of a sell-off.
Related: ETH traders gauge fakeout risks after 40% ETH price rally
Independent market analyst “Altcoin Sherpa” cited a similar technical setup this July 18, noting that the ongoing ETH/BTC rally could be “unsustainable.”
In other words, ETH/BTC could see a reversal toward 0.06 by September if the inflection resistance zone holds for a 9.5% decline. The 0.06 BTC level also coincides with the 0.236 Fib line, as shown in the chart above.
The views and opinions expressed here 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 conduct your own research when making a decision.
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