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The cryptocurrency market recovered on Thursday following Elon Musk’s renewed endorsements at the ‘B’ Word Conference on Wednesday.
Ether (ETH), the native cryptocurrency of Ethereum, rebounded sharply on Thursday after Elon Musk revealed for the first time that his private rocket firm SpaceX holds Bitcoin (BTC), and Tesla would likely resume accepting bitcoin payments for its electric cars.
The Bitcoin/USD exchange rate was below $30,000 before the big reveal, but it increased by more than 5%, reaching an intraday high of $32,895. Ether, which typically moves in lockstep with the flagship cryptocurrency, increased in value as well.
It reclaimed $2,000 on Wednesday, rising by as much as 18.20% from its week-to-date low of $1,720.
In an email statement, Lukas Enzersdorfer-Konrad, chief product officer at financial services company Bitpanda, told Cointelegraph that Ethereum would continue to trail Bitcoin in the coming sessions.
“As soon as the “big brother” finds its level of support,” he continues, “Ethereum will most likely follow suit.”
Ethereum’s classic pattern sets a target price of $2.5K.
The most recent uptick in the Ethereum market also came from a support level that had previously capped Ether’s downside attempts.
Independent market analyst Rekt Capital, trading under the alias Rekt Capital, displayed a “orange area” on a weekly ETH/USD chart, illustrating three bearish wicks and their ability to keep 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 occurs when the price breaks above the upper trendline of the Wedge, accompanied by an increase in volume.
As a result, bulls set their upside profit target as high as the maximum wedge height.
When it comes to trading inside a Falling Wedge pattern, ether prices almost tick all the boxes. Rekt Capital emphasised this in a chart he published on Thursday.
“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.
The maximum distance between the upper and lower trendlines of the Wedge is approximately $850. As a result, a breakout above the upper trendline could send prices to at least $2,500, according to the classic technical setup.
Nonetheless, a short-term technical setup, as shown in the chart below, suggests that prices could fall sharply below $2,000 in the near future.
According to Rekt Capital, the daily Ethereum chart shows that the price could fluctuate between $1,850 and $2,080 before a potential bullish breakout.
According to Kirkpatrick and Dalquist’s book “Technical Analysis,” falling wedges have a failure rate of only 8% to 11%. Furthermore, the possibility of a bearish breakout has a higher failure rate of 15% to 24%.