Mapping the Market: Cryptocurrency ether makes its break

Ether spent the last month moving sideways as it caught ​its breath following a stunning rally of more than ​30% in late August, but technical analysis ‌suggests the ​cryptocurrency is ready to make its next move higher.

Click here for a detailed technical analysis chart. The fresh momentum comes as ether rallies beyond the confines of a formation ‌known as a “bull flag” that had evolved over recent weeks.

A bull flag is considered a continuation pattern. It usually occurs when a sharp surge higher — which forms the flag “pole” — is followed by a period of narrow range trade. This phase — known as consolidation — is necessary ‌as previous buyers take profits and new entrants prepare for the next move. This makes up the “flag” portion of the ‌formation. Usually, a bull flag ends when prices rally above the top of the flag, which occurred on Monday, when ether surpassed the September 11 high, which is at $2,661.52, according to data supplied by LSEG.

That should propel ether toward a target of $3,050, based on the size of the bull flag formation. Along ⁠the way, ​it could stop for another period ⁠of consolidation in the $2,775 to $2,825 range, which is the site of previous daily lows and highs. Adding to the optimism, ether rose on Friday above ⁠the 10-day moving average — a chart constraint closely watched by technical analysts. Ether has also secured a foothold above a trendline drawn from its February ​high. Technical analysts use trendlines, which connect previous lows or highs, to determine where price moves can pick up ⁠momentum.

These supporting developments lend confidence to the current upswing and increase the chances that it could extend beyond the initial target of $3,050 and possibly up to the $3,395 ⁠to $3,445 area, ​which coincides with the January and December highs. However, if ether were to fall below the $2,560/65 area, bulls would grow nervous, while a move beneath $2,350/60 would probably spell the end of the rally.

What the chart shows: (Mapping the Market is a daily column written ⁠by Reuters journalists. The commentary is ⁠based on a technical analysis of financial charts, which helps assess the likelihood of future price moves but does not guarantee the outcome. The column does not constitute investment advice or trading ‌recommendations. )

(Christopher Romano is ‌a Reuters market analyst. The views expressed are his own; Editing ​by Burton Frierson and Nia Williams)