From the desk of Tom Bruni @BruniCharting
Cryptocurrencies are back on our radar for the first time in a while…but we’re not talking about Bitcoin, which remains stuck below a year of overhead supply.
Instead, our focus is on Ethereum, which is breaking out on an absolute and relative basis.
Let’s get into it.
First, let’s look at the ratio of Ethereum/Bitcoin breaking out of a 1-year base and reclaiming a 2.5-year support level at 0.0245. Also, notice that momentum is in a bullish range and the 200-day moving average is upward-sloping, both conditions that are supportive of higher prices. Is the next stop over 50% higher at 0.04? We think so.
Click on the chart to enlarge view.
And on an absolute basis, Ethereum is also emerging from a 1-year base. If prices are above 225, then this breakout is intact and the next stop is former support/resistance near 400. Just like we saw on the relative chart, momentum is in a bullish regime and the 200-day is upward-sloping on an absolute basis too.
On an absolute basis, if prices of Ethereum are going to break out then Bitcoin is likely to follow. With that said, there have been a lot of failed moves around the 10,000 level, so we want to wait for a move above 10,500 to confirm the start of its move towards 13,000.
There hasn’t been much to say about Cryptocurrencies over the last year, but it appears prices are beginning to trend once again. For now, our focus is on Ethereum as it’s showing relative strength and absolute momentum and has clearly-defined risk.
If this truly is the start of the next leg higher, our initial targets will be just the start and we’ll likely see prices back towards their all-time highs in the coming quarters and years.
Let us know what you think.
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