Recent Ethereum price action has been marked by heightened volatility, reflecting broader market uncertainties. As of late August 2024, Ethereum’s value against Bitcoin has been consistently downtrending, stirring concerns among investors.
The ETH/BTC pair has repeatedly tested crucial support levels. However, a decisive bullish response has been absent, fueling speculation about the potential for further downside.
A recent tweet by Michaël van de Poppe has captured the market’s attention, suggesting a possible reversal based on a historical bullish divergence pattern.
ETH/BTC Bullish Divergence Hints at Potential Reversal
Michaël van de Poppe’s tweet highlighted a valid daily bullish divergence on the ETH/BTC chart, echoing similar patterns in Jan. 2021 and Sept. 2019. Historically, these divergences marked significant lows for Ethereum against Bitcoin, leading to notable rallies.
The tweet suggests that Ethereum could be on the brink of a significant upward movement if history repeats, potentially reversing the prolonged downtrend.
Analyzing the current ETH BTC chart, the price action confirms a persistent downward trajectory, with ETH struggling to maintain support around the 0.0425 level. Despite this, a bullish divergence, where the price makes lower lows while RSI makes higher lows, signals a potential weakening in bearish momentum.
However, for this bullish setup to materialize, ETH/BTC must first clear the immediate resistance levels around 0.04622 and 0.0515. These levels have previously acted as strong barriers, and a failure to break above could invalidate the bullish divergence, reinforcing the bearish outlook.
On the contrary, a successful breakout could attract buyers, potentially triggering a rally towards 0.06047, as van de Poppe’s chart suggests.
Technical Pattern Gives Bearish Outlook For Ethereum
Michaël van de Poppe’s predictions aside, a technical setup, the ‘bear flag,’ has some bearish cues for the ETH USD pair.
The bear flag pattern appears on a cryptocurrency price chart when a brief, sharp countertrend movement—often referred to as the flag—follows a preceding downward trend. The formation typically signals a potential reversal of the countertrend.
Volume levels may stabilize or decrease during consolidation in a bearish continuation setup. During the consolidation period of a bear flag setup, the market often trends upward in response to the initial price drop, triggering FUD.
The emotional response typically results in higher-than-average trading volumes as investors and traders re-enter the market to capitalize on or mitigate the price movement’s effects.
Traders calculate the bear flag pattern’s price target by subtracting the flagpole’s length from the breakout price level. As a result, the ETH USD price might drop to $1,665, a 35% drop from the current price levels.
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