Ethereum price surges 50% against Bitcoin in one month – but there’s a catch

Ethereum price surges 50% against Bitcoin in one month – but there’s a catch
Ethereum price surges 50% against Bitcoin in one month – but there’s a catch

Ether (ETH), Ethereum’s native toke, continues its uptrend against Bitcoin (BTC) as euphoria around the upcoming network upgrade, “the Merge”, grows.

ETH at multi-month highs against BTC

On the daily chart, ETH/BTC rose to an intraday high of 0.075 on August 6, following a 1.5% upside move. Meanwhile, the pair’s gains came as part of a broader rebound trend that started a month ago at 0.049, which equates to about a 50% gain.

ETH/BTC Daily Price Chart. Source: TradingView

The ETH/BTC recovery has emerged in part due to the merger, which will see Ethereum switch from proof-of-work (PoW) mining to proof-of-stake (PoS).

Ethereum’s “rising wedge” suggests selling

From a technical perspective, Ether is staring at potential temporary losses while ETH/BTC paints a compelling rising wedge.

Rising wedges are bearish reversal patterns that occur when price trends increase within an area defined by two rising, converging trend lines. As a rule, they resolve after the price breaks below the lower trend line by as much as the maximum height of the structure.

ETH/BTC daily price chart with “rising wedge” breakdown setup. Source: TradingView

Also, a declining volume and relative strength index (RSI) against a rising ETH/BTC further increases the risk of bearish divergence. This adds weight to the wedge’s bearish setup for a target of 0.064 BTC, or down 11% from today’s price.

Ether looks stronger compared to the dollar

Meanwhile, technicians paint a brighter picture for Ethereum against the US dollar. The potential for a 10% breakout for ETH/USD looks strong in August due to a classic bullish reversal pattern.

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On a four-hour chart, ETH/USD has formed what appears to be a “double bottom”. This pattern resembles the letter “W” due to two consecutive lows followed by a change in direction from downtrend to uptrend, as illustrated below.

ETH/USD four-hour price chart with “double bottom” breakout setup. Source: TradingView

Meanwhile, a double bottom pattern resolves after the price breaks above the usual resistance level and – as a rule of technical analysis – rises by as much as the distance between the first bottom and the resistance.

As a result, ETH could rise towards $1,940 in August, up 10% from today’s price.

The views and opinions expressed herein are solely those of the author and do not necessarily reflect the views of Every investment and trade involves risk, you should do your own research when making a decision.