Aug 24 (Reuters) - 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.
The catalyst was a surprise move by the U.S. Treasury this week: markets turned against the dollar after the U.S. Treasury announced a bond 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.