Disclaimer: The findings of the following article are the sole opinion of the writer and should not be considered as investment advice
Both the 30-day and 60-day correlations of Bitcoin with Ethereum have dropped since May 2020 from 0.95 to 0.51. While this is news to rejoice over, especially for ETH enthusiasts, it may just be a development fueled by the DeFi summer.
The YTD returns of ETH [260%] are more than double that of BTC [121%], a finding that also explains the drop in correlation mentioned above. The king of altcoins has decoupled enough from the king of crypto, but will it last? This will be an interesting development to keep an eye out for as the year comes to an end.
As for ETH’s price, it looked bearish at press time. However, should the bull run continue, the price will disregard this bearish indication and surge higher on the charts.
Ethereum 1-week chart
Source: ETHUSD on TradingView
The one-week chart for ETH is an important one, with important trends for both the higher timeframe and the lower timeframe able to be identified. The chart attached herein highlighted two important levels; regardless of bullish or bearish, these levels are important and will play an important role soon.
Rationale
The chart pictured two Fibonacci extensions, 1 extending from the ATH to the ATL [all-time low], the other a trend-based Fibonacci extension that would extend from the ATH to ATL and then towards the latest top at $623.22. Here’s why this is helpful,
- By factoring the recent top, we can identify where the price might go, be it bullish or bearish
- The intersection of both these Fibonacci tools was a range extending from $397 to $309
- The overall pattern being formed [ascending channel] on a daily/weekly time frame also underlined a bearish scenario for ETH
- Adding this to the already bearish scenario for Bitcoin further helps us understand that we are bound to see a pullback before the bull run actually begins
- Another important level to keep an eye out for is the wick formed on 31 August – $489.
Conclusion
The one-week chart and the one-day chart both highlighted a bearish pattern [ascending channel], and multiple indicators pointed to a drop coming soon. These support ranges will be important when the price pulls back on the charts.
The post appeared first on AMBCrypto
