This could be a bearish call for Ethereum
The ether-bitcoin exchange rate (ETH/BTC) could be preparing for a breakout.
At press time, ether is trading at 0.07165 BTC (about $310), with the cross-cryptocurrency exchange rate coming off a recent low of 0.0655 BTC ($284) on August 15. Yet, as it is widely believed that ethereum’s main purpose is to serve as the launchpad for decentralized applications, the platform’s cryptocurrency could emerge as one to watch in the months ahead.
Ethereum developers have now set September 18 as a date for Byzantium Testnet launch. The first of two phases in the platform’s coming ‘Metropolis’ update, it’s likely to see better ethereum applications created and distributed more widely.
Given a potential increase in usability, it’s possible ether could extend its already impressive year-to-date gains. At one point of time in June, ether-US dollar exchange rate was up 2,800%.
However, while the ETH/USD pair has been kind to traders so far this year, price chart analysis indicates that ETH/BTC is be setting up for a violent move, most probably to the downside.
In simple terms, ETH could take a hit against BTC.
ETH/BTC has been consolidating for more than a month now, and as the textbook says, the bigger the period of consolidation, the bigger the breakout.
What we have on the daily chart is a descending triangle pattern, which forms when a falling trend line and a horizontal support line converge. Descending triangle is typically a bearish continuation pattern formed during a downtrend, but there are instances when descending triangles form as reversal patterns at the end of an uptrend.
The above chart shows a sideways breach of the falling trend line, which is hardly encouraging for those who are long ether. A downside break of the descending triangle pattern would signal continuation of the sell-off from the June 13 high of 0.1560 BTC. The move lower could be extended to 0.04 BTC levels.
Only a move above the August 9 high of 0.0940 BTC would revive the bullish view.
Disclaimer: This article should not be taken as, and is not intended to provide, investment advice. Please conduct your own thorough research before investing in any cryptocurrency.
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