ETHXBT has formed higher lows and lower highs, creating a symmetrical triangle pattern on its 4-hour time frame. Price just bounced off the triangle support as bitcoin sold off yesterday and might be due for a test of resistance.
The 100 SMA is above the 200 SMA so the path of least resistance is to the upside. The gap between the moving averages is widening, indicating a buildup in buying pressure. However, stochastic is already indicating overbought conditions so a selloff might be in the cards, possibly leading to another test of support.
Meanwhile RSI is on the move up to show that buyers are still in control, likely with enough energy to take it ETHXBT up to the resistance at 0.03000. Stronger buying momentum could even lead to an upside breakout from the triangle resistance while a surge in bitcoin price could spur a break below support at 0.02500.
Bitcoin price has gained a lot of ground last week and early this week when Chinese investors reportedly put more funds in the cryptocurrency owing to government efforts to weaken the yuan and impose capital controls. However, the pickup in Chinese manufacturing activity as indicated by today’s PMI release could keep demand for China’s assets afloat.
For now, it appears that profit-taking from the recent surge in bitcoin is benefiting ETHXBT. Looking at the longer-term time frames shows that bitcoin has a long way to go before completing its correction from the recent rally so ETHXBT could continue to enjoy upward pressure.
In addition, the network congestion in bitcoin could increase the appeal of other virtual currencies like ethereum. As Gavin Andresen warned recently, the rise in ethereum could be seen as a warning sign for bitcoin.
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