16% Ethereum price rebound activates a classic bullish pattern — $2.5K next?
July 22, 2021. Summarized by summa-bot.
Compression ratio: 51.6%. 1 min read.
The cryptocurrency market recovered on Thursday after renewed endorsements from Elon Musk at the 'B' Word Conference Wednesday.
Ethereum's native crypto Ether (ETH) rebounded sharply on Thursday after Elon Musk disclosed for the first time that his private rocket firm SpaceX holds Bitcoin (BTC), and Tesla would probably resuming the bitcoin payment option for its electric cars.
Independent market analyst, known by the pseudonym Rekt Capital, flashed a so-called "orange area" on a weekly ETH/USD chart, illustrating three bearish wicks and their ability to shied the pair from falling lower.
"ETH has rallied +16% since rebounding from the orange area," the analyst explained, coupling the price floor with a support trendline that apprehensively constituted a Falling Wedge.
In detail, Falling Wedges are bullish reversal patterns that start wide at the top but start contracting as the prices move lower, forming a sequence of lower highs and lower lows.
A bullish confirmation comes when the price breaks above the Wedge's upper trendline with a spike in volumes.
Ether prices almost check all the boxes when it comes to trading inside a Falling Wedge pattern.
"As long as ETH holds the bottom of the structure as support until the end of the week, [it] will confirm a return to the structure after briefly losing it earlier this week," added Rekt Capital.
Nonetheless, the prices still risk falling sharply below $2,000 based on a short-term technical setup, as shown in the chart below.
The daily Ethereum chart shows price could fluctuate between $1,850-2,080 before the potential bullish breakout, noted Rekt Capital.
Kirkpatrick and Dalquist's book titled "Technical Analysis" notes that falling wedges have a failure rate of just 8% to 11%.