Cryptocurrency ether’s technical picture brightens after sharp rebound

Aug 24 (Reuters) – Ether lost nearly 70% of its value over the past year, largely as the U.S. dollar strengthened, but technical analysis suggests the tide may be ​turning for the world’s second-largest cryptocurrency.

The catalyst was a surprise move by the U.S. Treasury this week: markets turned against the dollar after the U.S. Treasury announced a bond buyback plan that weighed on the U.S. currency broadly. As a ​result, ether has essentially erased all of its fall from April’s monthly high.

Such ​a rapid rally, however, rarely continues unchecked. Markets rarely move in a ⁠straight line, and the speed of ether’s move suggests the market may now have ​to catch its breath before advancing further. Indeed, the rally has struggled near the April ​monthly high, which is at $2,464.54, according to data supplied by LSEG. That hesitation points to a possible pause: ether’s pullback before surpassing that level indicates it could enter a consolidation phase where its price ​holds within a band of roughly $2,200-$2,450 as market participants digest the move that lifted ​it 31% this week from trough to peak.

Momentum readings back up this cautious view. The daily Relative ‌Strength ⁠Index, a widely used gauge of momentum, is in overbought territory, supporting the notion that ether has entered a “distribution” phase, when early buyers take profits and others enter the market in anticipation of further gains.

Should the coin push through resistance, though, the path higher ​looks clear: a break ​above the April ⁠high could lead traders initially to target the $2,775-$2,825 zone, followed by $3,040-$3,070 and possibly even $3,400-$3,450. On the downside, a fall below $2,200 would undermine ​the bullish sentiment.

Ether has erased four months of ​losses this ⁠week after a dollar-weakening Treasury announcement

Price is consolidating just below the April high of $2,464.54, with resistance capping gains for now

A break above that level opens targets at $2,775-$2,825, then $3,040-$3,070, and potentially $3,400-$3,450; ⁠a drop ​below $2,200 would negate the bullish setup

(Daily markets commentary from ​Reuters analysts on the signals financial charts are sending – and what they might mean.)

Christopher Romano is a Reuters ​market analyst. The views expressed are his own; Editing by Burton Frierson and Lisa Shumaker

Reuters

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