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We haven’t looked at the Ethereum | Bitcoin spread for a while. In the last note on XETXBT in late August, we were stalking a top out in the June rally. Price pressed a little higher than expected, but on 9 September, it finally broke down. The June channel broke, then key support broke, then the MACD zero line broke all in fairly quick succession. Price is currently in a mini rest phase before heading down again, which strongly suggests that Ethereum underperforms Bitcoin near term.
A couple of teaching tips from the chart. Back on 12 September price fell out of the uptrend channel and at the time it would have been a strong invitation to exit on the breakdown. However the very next day price shot back up to find the underside of the channel again. This is very common support becomes resistance and the first move is rarely the real thing. Very often there will be a break of support and dash down and then a dash back up to retest before failing. As a rule of thumb, the weaker
the retest back up, the more bearish the underlying forces are.
We see a similar event on 19 September. Price gaps down through key support (which means that the line had a lot of authority) but then tries very weakly to push back up and retest before failing.
