Things may be looking up for Ethereum’s native token, ether (ETH).

Having suffered a 50 percent decline in March, the world’s second-largest cryptocurrency by market value fell to $394 by April 1 – the lowest level since Dec. 7, according to Bitfinex data.

However, at the time, ETH was extremely oversold, with the 14-day relative strength index (RSI) at record lows.

So, a corrective rally was overdue and, accordingly, ETH has created a minor double-bottom bullish reversal pattern as seen on the chart below.

Daily chart

What’s more, ether was trading above the neckline hurdle of $418 earlier today, signaling increased odds of a corrective rally to $475.

However, today’s drop in bitcoin prices from $7,100 to $6,700 seems to have played a spoilsport. ETH backed off from the daily high of $430 and is currently trading at $392.

So, ether has failed to hold on to gains above the double bottom neckline. Further, the daily candle now looks like a bearish “inverted hammer.”

These developments have neutralized the immediate bullish outlook.

Still, ETH is holding well above the recent low of $358 and could close (as per UTC) above $418 if BTC regains poise. In such a scenario, one can envisage a move higher to $475.

Also, the “death cross” indicator – 50-day moving average (MA) and 200-day MA crossover – could occur very soon. It should not be an undue cause of concern as the ominous-sounding signal is often followed by a rally (working often as a contrarian indicator).

There is always a risk of bitcoin extending losses further, though, and the ether-U.S. dollar exchange rate chart will likely follow suit. Hence, ETH bulls risk being trapped on the wrong side of the ETH/USD market.

Still, the ETH’s oversold status could work in its favor against bitcoin – i.e. ether will likely outperform bitcoin, irrespective of any bitcoin bull/bear move. And this is already happening, as BTC/USD has depreciated by 4 percent in the last 24 hours, while ETH/USD is trading largely unchanged on a 24-hour basis, according to CoinMarketCap. It also means that ETH has effectively appreciated by 4 percent against bitcoin.

ETH/BTC daily chart

The above chart (prices as per Bittrex) shows that the ETH/USD pair has cleared the descending trendline in a convincing manner, having formed a base around 0.053 BTC since the end of March.

The upside break adds credence to the “dragonfly” doji candle, which is characterized by a small body and a long lower shadow. It is considered a sign of bullish reversal if it appears at the bottom of the downtrend, as seen in the above chart.

View

The ETH/USD chart shows signs of life, but is vulnerable to a deeper correction in BTC/USD.

ETH/BTC looks set to test the 200-day moving average (MA) located at 0.0652 BTC in the short-run.

Only a close below BTC 0.053 (April 4 low) would signal a bullish-to-bearish trend change.

Race cars image via Shutterstock