ETHXBT is still stuck in its triangle pattern and the consolidation is getting tighter, which means that a breakout is bound to take place soon. Moving averages are oscillating, indicating indecision between buyers and sellers, but the 100 SMA is still slightly above the longer-term 200 SMA.
An upside breakout could take ETHXBT up to the triangle highs around 0.01700. A downside breakout could take it to the lows near 0.01300. RSI is on middle ground and barely offering directional clues but is on its way up to suggest a bit of buying pressure. Stochastic is also on middle ground and is pointing higher. This means that the three indicators all hint at a possible upside break.
However, market sentiment appears to be favoring bitcoin these days, although the cryptocurrency has taken a bit of a hit on news that the Chinese government is looking into ways to curb bitcoin trading in the mainland. Recall that an influx of funds from Chinese investors propped bitcoin price up last month and the government is saying that this phenomenon is making it more difficult for them to keep the local currency weak.
Earlier today, China printed a weaker than expected trade balance spurred by a 7.3% drop in exports. This follows the previous month’s 10% slide, indicating that demand for Chinese products has weakened internationally. A weaker yuan could make their products more affordable and in-demand, which explains why the government wants to devalue the currency.
To protect the value of their investments, Chinese traders have decided to hedge their yuan holdings with long bitcoin positions. After all, the alternative asset has been enjoying strong gains across the board, even against its rival digital currencies. On the other hand, ethereum has been weighed down by recent attacks, which eventually led developers to construct a hard fork.
Moving forward, bitcoin could continue to enjoy the lead against ethereum if cryptocurrencies advance, particularly in the wake of risk-off market moves ii the event of a Trump victory. This would bring more uncertainty in the financial markets and global economy so traders might want to stay out of traditional assets in that case, chasing higher returns in cryptocurrencies instead.
Zooming out to the daily time frame shows that ETHXBT is still lingering at the bottom of its longer-term range but that the symmetrical triangle consolidation pattern is looking more like a bearish flag. This is typically considered a continuation pattern, possibly sending ETHXBT to the next support at 0.00900 in the event of a downside break.
A bounce, on the other hand, could lead to a recovery to the 0.01900 area or the very top of its range at 0.02200. On this long-term time frame, the 100 SMA is below the 200 SMA to signal that the path of least resistance is to the downside. RSI is on the move up to suggest a possible return in buying pressure while stochastic is also pointing north.
News from the ethereum sector has been mixed as a blockchain startup called Synereo threatens the monopoly of ethereum in hosting distributed applications. Meanwhile, Microsoft has shared plans to launch its Ethereum Consortium Blockchain Network, which could better leverage the use of its distributed ledger.