- Ether could jump 35% from Tuesday’s close as it continues to outperform bitcoin, according to Fairlead Strategies’ Katie Stockton.
- If ether can clear resistance near $US2,724 ($AU3,679), it’s next target would be the 61.8% fibonacci retracement level near $US3,356 ($AU4,533), Stockton said.
- Ether traded up as much as 8% to $US2,688 ($AU3,630) in Wednesday afternoon trades.
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Stockton believes if ether can clear its next resistance level at $US2,724 ($AU3,679), its next target would be the 61.8% fibonacci retracement level near $US3,356 ($AU4,533), according to the note.
In technical analysis, traders use the fibonacci retracement tool to help identify levels of support and resistance that a security might encounter during a sell-off or rally. The tool is applied to a high and low in a security’s price and then based on the Fibonacci “golden ratio,” which focuses on the 61.8%, 50%, 38.2%, and 23.6% levels.
Ether surged as much as 8% to $US2,688 ($AU3,630) on Wednesday, confirming its recent breakout above short-term resistance. With the breakout confirmed, Stockton feels “comfortable taking a bullish intermediate-term stance [on ether],” the note said.
The upside momentum in ether’s price comes after the cryptocurrency avoided a breakdown below key support near $US1,728 ($AU2,334) in July following a third successful test of that level, “preserving its long-term uptrend,” Stockton highlighted.
Now, short-term, medium-term, and long-term momentum indicators are signalling a bullish move for ether going forward, according to the note. If momentum deteriorates in ether, Stockton is watching its 50-day moving average of $US2,153 ($AU2,908) as potential support. A drop to that level represents potential downside of 20% from current levels.
Finally, Stockton believes the broader cryptocurrency space could enter risk-on mode with ether’s outperformance relative to bitcoin accelerating in recent weeks.
“Bitcoin is losing relative strength versus Ether, noting the ratio above has broken down below its 50-day MA and a minor low, signaling a potential switch to a risk-on environment within the cryptocurrency space,” Stockton explained.