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The cryptocurrency market recovered on Thursday after renewed endorsements from Elon Musk at the 'B' Word Conference Wednesday.
Ethereum's native crypto Ether (ETH) rebounded sharply on Thursday after Elon Musk disclosed for the first time that his private rocket firm SpaceX holds Bitcoin (BTC), and Tesla would probably resuming the bitcoin payment option for its electric cars.
The BTC/USD exchange rate was below $30,000 but bounced by more than 5% after the big reveal, touching an intraday high of $32,895. Ether, which tends to move in lockstep with the flagship cryptocurrency, surged likewise.
Ether was holding onto its previous session's gains on Thursday. Source: TradingView.com
It reclaimed $2,000 on Wednesday, rising by as much as 18.20% from its week-to-date low of $1,720.
Lukas Enzersdorfer-Konrad, chief product officer at financial services company Bitpanda, told Cointelegraph in an email statement that Ethereum would continue tailing Bitcoin in the coming sessions.
"As soon as the “big brother” finds its support level," he added, "Ethereum will most likely follow suit."
Classic pattern sets $2.5K target for Ethereum
The latest bounce in the Ethereum market also originated from a support level that had earlier capped Ether's downside attempts.
Independent market analyst, known by the pseudonym Rekt Capital, flashed a so-called "orange area" on a weekly ETH/USD chart, illustrating three bearish wicks and their ability to shied 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 comes when the price breaks above the Wedge's upper trendline with a spike in volumes.
In doing so, bulls place their upside profit target as up as the maximum wedge height.
Ether prices almost check all the boxes when it comes to trading inside a Falling Wedge pattern. Rekt Capital highlighted the same in a chart he published Thursday.
Ether falling wedge setup highlighted by Rekt Capital. Source: TradingView.com
"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 Wedge's upper and lower trendline is roughly $850. Therefore, according to the classic technical setup, a breakout above the upper trendline could send the prices to at least $2,500.
Related: Decoupling ahead? Bitcoin and Ethereum may finally snap their 36-month correlation
Nonetheless, the prices still risk falling sharply below $2,000 based on a short-term technical setup, as shown in the chart below.
ETH falling wedge setup on its daily chart. Source: TradingView.com
The daily Ethereum chart shows price could fluctuate between $1,850-2,080 before the potential bullish breakout, noted Rekt Capital.
Kirkpatrick and Dalquist's book titled "Technical Analysis" notes that falling wedges have a failure rate of just 8% to 11%. Moreover, the possibility of a bearish breakout has a higher failure rate of 15% to 24%.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.
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The views and opinions expressed in this article are solely those of the authors and do not reflect the views of Bitcoin Insider. Every investment and trading move involves risk - this is especially true for cryptocurrencies given their volatility. We strongly advise our readers to conduct their own research when making a decision.