Mapping the Market: Cryptocurrency ether's technical picture brightens after sharp rebound

Ether lost nearly 70% of its value over the ​past year, largely as the U.S. dollar ​strengthened, but technical analysis suggests the tide ‌may ​be turning for the world's second-largest cryptocurrency. Click here for a detailed technical analysis chart. The catalyst was a surprise move by the U.S. Treasury this week: markets turned ‌against the dollar after the U.S. Treasury announced abond buyback plan that weighed on the U.S. currency broadly. As a result, ether has essentially erased all of its fall from April's monthly high.

Such a rapid rally, however, rarely continues ‌unchecked. Markets rarely move in a straight line, and the speed of ether's move suggests the market may now ‌have to catch its breath before advancing further. Indeed, the rally has struggled near the April monthly high, which is at $2,464.54, according to data supplied by LSEG. That hesitation points to a possible pause: ether's pullback before surpassing that level indicates it could enter a consolidation phase ⁠where ​its price holds within a ⁠band of roughly $2,200-$2,450 as market participants digest the move that lifted it 31% this week from trough to peak. Momentum readings back up this ⁠cautious view. The daily Relative Strength Index, a widely used gauge of momentum, is in overbought territory, supporting the notion that ether ​has entered a "distribution" phase, when early buyers take profits and others enter the market in anticipation of further ⁠gains.

Should the coin push through resistance, though, the path higher looks clear: a break above the April high could lead traders initially to ⁠target ​the $2,775-$2,825 zone, followed by $3,040-$3,070 and possibly even $3,400-$3,450. On the downside, a fall below $2,200 would undermine the bullish sentiment. What the chart shows:

(Daily markets commentary from Reuters analysts on the signals financial charts are sending - and what they might mean.) (Christopher Romano ‌is a Reuters ‌market analyst. The views expressed are his own; Editing by ​Burton Frierson and Lisa Shumaker)