After rebounding off of the 0.021 level for the second time this month, the ETH/BTC pair is making a steady climb to the 0.025 level.  In our previous Ethereum technical analysis, we discussed how the price would have to break the 0.025 pivot in order to be able to see a rally anywhere near the big pivot at 0.029. Currently, ETH is trading at 0.026, meaning that the market has broken out of the resistance zone and is ready to new heights.

Unfortunately, Ethereum’s market cap has also dropped around 25% in a week, reason being the big selloff from 0.036 all the way down to a low of 0.022 – a 39% price decline. The good news is that there was strong proven support at the 0.022 level both prior and after the major selloff, indicating that the market won’t crash into oblivion.

An interesting chart is provided by igster from tradingview. He suggests that the ETH market may be seeing a classic case of the Elliot waves.

Elliot Waves were invented by Ralph Nelson Elliott around the 1900s, Using the Elliot Wave pattern he was able to predict the day that a 13 month long bear trend reverse for the Dow Jones’ – a popular stock market index. There are different wave cycles that one can use to analyze a stock using Elliot Waves, for this example we will be using the 8 wave cycle. Here is how it looks:

Image from stockcharts

Back to the chart provided by igster we can see according to the above analysis Ethereum just ended the a wave, meaning a rally is coming followed by another decline.

Another important indicator to watch out for is the bullish RSI divergence as pointed out by Trading_Jazz

 from tradingview. Divergence in a security means when the price and an indicator such as the RSI (Relative Strength Index) move in separate directions. In this case, looking at ETH/XBT’s RSI we can see an increase in RSI, with little to no price movement. While the market did exhibit a double bottom, the RSI kept climbing.

The definition for a double bottom is self explanatory, and analysts suggest that the security should exhibit a 10-20% gain after the first bottom, followed by a 3-4% gain after the second bottom. Ethereum’s first bottom occurred at around the 0.022 level, the price then continued to climb to 0.027, roughly a 19% increase – which falls in line with how high analysts say the price should have gone. If we were to expect a 3-4% increase post the second bottom ETH/XBT’s price should settle right around the 0.024-0.025 level. As ETH is currently trading at 0.025 we can conclude that the double bottom has played out correctly. Howevcer, don’t forget about the bullish RSI divergence which could also contribute to more positive momentum for the market.

Conclusion

The two competing theories are the double bottom with the bullish RSI divergence and the 8 wave cycle Elliot Waves. The RSI divergence suggest further bullish action, while the Elliot Waves predict a run up on the 7th wave, followed by further decline during the final 8th wave.

If you liked this article follow us on Twitter @themerklenews and make sure to subscribe to our newsletter to receive the latest bitcoin and altcoin price analysis and the latest cryptocurrency news.