Things may be looking up for Ethereum's native token, ether (ETH).
Having suffered a 50 percent decline in March, the world's second-largest cryptocurrency by market value fell to $394 by April 1 - the lowest level since Dec. 7, according to Bitfinex data.
However, at the time, ETH was extremely oversold, with the 14-day relative strength index (RSI) at record lows.
So, a corrective rally was overdue and, accordingly, ETH has created a minor double-bottom bullish reversal pattern as seen on the chart below.
Daily chart
What's more, ether was trading above the neckline hurdle of $418 earlier today, signaling increased odds of a corrective rally to $475.
However, today's drop in bitcoin prices from $7,100 to $6,700 seems to have played a spoilsport. ETH backed off from the daily high of $430 and is currently trading at $392.
So, ether has failed to hold on to gains above the double bottom neckline. Further, the daily candle now looks like a bearish "inverted hammer."
These developments have neutralized the immediate bullish outlook.
Still, ETH is holding well above the recent low of $358 and could close (as per UTC) above $418 if BTC regains poise. In such a scenario, one can envisage a move higher to $475.
Also, the "death cross" indicator - 50-day moving average (MA) and 200-day MA crossover - could occur very soon. It should not be an undue cause of concern as the ominous-sounding signal is often followed by a rally (working often as a contrarian indicator).
There is always a risk of bitcoin extending losses further, though, and the ether-U.S. dollar exchange rate chart will likely follow suit. Hence, ETH bulls risk being trapped on the wrong side of the ETH/USD market.
Still, the ETH's oversold status could work in its favor against bitcoin - i.e. ether will likely outperform bitcoin, irrespective of any bitcoin bull/bear move. And this is already happening, as BTC/USD has depreciated by 4 percent in the last 24 hours, while ETH/USD is trading largely unchanged on a 24-hour basis, according to CoinMarketCap. It also means that ETH has effectively appreciated by 4 percent against bitcoin.
ETH/BTC daily chart
The above chart (prices as per Bittrex) shows that the ETH/USD pair has cleared the descending trendline in a convincing manner, having formed a base around 0.053 BTC since the end of March.
The upside break adds credence to the "dragonfly" doji candle, which is characterized by a small body and a long lower shadow. It is considered a sign of bullish reversal if it appears at the bottom of the downtrend, as seen in the above chart.
View
The ETH/USD chart shows signs of life, but is vulnerable to a deeper correction in BTC/USD. ETH/BTC looks set to test the 200-day moving average (MA) located at 0.0652 BTC in the short-run. Only a close below BTC 0.053 (April 4 low) would signal a bullish-to-bearish trend change.Race cars image via Shutterstock
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