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Disclaimer: The results of the following article are the sole opinion of the writer and should not be relied upon as investment advice
Both Bitcoin’s 30- and 60-day correlations with Ethereum have decreased from May 2020 from 0.95 to 0.51. While this is news to rejoice, especially for ETH enthusiasts, it may just be a development fueled by the DeFi summer.
ETH’s YTD returns [260%] they are more than double that of BTC [121%], a finding that also explains the aforementioned drop in correlation. The altcoin king has detached enough from the cryptocurrency king, but will it last? This will be an interesting development to watch as the year draws to a close.
As for the price of ETH, it looked bearish at press time. However, if the bullish run continues, the price will ignore this bearish indication and rise on the charts.
Ethereum 1 week chart
Source: ETHUSD on TradingView
The one-week chart for ETH is important, with major trends for both the higher and lower timeframes that can be identified. The attached graph has highlighted two important levels; Regardless of whether bullish or bearish, these levels are important and will soon play an important role.
Rationale
The chart depicted two Fibonacci extensions, 1 extending from ATH to ATL [all-time low], the other a trend-based Fibonacci extension that would extend from the ATL to the ATL and then towards the last high at $ 623.22. That’s why it’s useful,
- Looking at the recent high, we can identify where the price could go, both bullish and bearish
- The intersection of both of these Fibonacci tools was a range that stretched from $ 397 to $ 309
- The general model that is forming [ascending channel] over a daily / weekly time frame it also highlighted a bearish scenario for ETH
- Adding this to the already bearish scenario for Bitcoin further helps us understand that we are bound to see a pullback before the bullish run actually begins.
- Another important level to look out for is the wick formed on August 31 – $ 489.
Conclusion
The one-week chart and the one-day chart both showed a bearish pattern [ascending channel]and numerous indicators have indicated an upcoming decline. These support ranges will be important when the price returns to the charts.
