Has Ethereum finally bottomed out with Bitcoin? ETH price technicians point out the benefits

Ethereum's native token Ether (ETH) is positioned for gains against Bitcoin (BTC) in the coming weeks, based on favorable ETH/BTC technicals and bullish divergences.

ETH/BTC is close to breaking the falling wedge

One of the main reasons behind the ETH/BTC rally is the falling wedge pattern.

A falling wedge is a classic bullish reversal pattern that occurs when price makes lower highs and higher lows. After the price breaks above the upper trend line and rises to a level equal to the maximum distance between the upper and lower trend lines.

Since December 22nd, ETH/BTC has been trending in the same pattern, seeing a break above the upper trend line. Depending on the split point, the pair may rise to around 0.056-0.059 BTC in the new year, an increase of 6-13% from the current price levels.

However, veteran trader Peter Brandt disagrees, arguing that the aforementioned falling wedge pattern, a descending triangle, can be a bearish indicator. Descending triangles are considered bearish continuation patterns in downtrends, which ETH/BTC has been in for the past 15 months.

Therefore, a break below the lower trendline of the falling wedge could push the ETH/BTC pair to 0.044 BTC, an 8.5% drop from the current price level.

Mass divergence on the weekly chart

Longer-term charts, however, point to a possible rebound in the New Year and the first quarter of 2024.

For example, the price of Ether is making lower highs while the Relative Strength Index (RSI) is showing higher lows on the weekly chart, indicating significant divergence. This divergence suggests that the downward momentum is weakening, and a reversal to the upside may be imminent.

Moreover, the price is treading near the multi-year uptrend line and a support junction that includes the 0.048-0.052 BTC area.

Related: Does Bitcoin's Dominance Hint at a Full-Blowed Altcoin Era?

This combination limits ETH/BTC's downside potential in the coming weeks, leading to the 200-week EMA (the blue wave) near 0.057 BTC in the New Year – also the aforementioned downside target.

On the contrary, the bears will try to bring down the price of ETH below the support combination, which threatens the price to fall to 0.036 BTC, a historically significant resistance level between August 2018 and September 2020.

This article does not contain investment advice or recommendations. Every investment and business activity involves risk, and readers should do their own research when making a decision.