Technician’s Take: ETC and BTC to Bounce From Support
- Bitcoin and Ethereum are still both languishing in what looks like a well supported base zone and the preferred view remains for an upside resolution.
- Ethereum looks to outperform Bitcoin.
Since there isn’t a great deal to add to either view today, I thought we could look at the relative chart again. Now admittedly I called this a little early a few weeks back, but the XETXBT spread has fallen back into the October 2021 base zone top. As such, we have to consider it as potential support for the decline that has been underway since last December.
The coil in the title of these comments refers to a gradual dimunition of price swing ranges between two obvious levels. The first is the downtrend line which has contained the move down. The second is the top of that October 2021 base. As price squeezes down into the end of the ostensible pattern, it builds potential energy. Think of a wave coming in over shallower and shallower waters, the height of the wave expands, the forward energy has to go somewhere.
Also note that RSI is channelling down and just stalled to the downside. Typically momentum leads price and the view is that the price of the spread will expand and breakout to the upside. In other words Ethereum starts to outperform Bitcoin.