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The Ethereum price has jumped 21% against Bitcoin in seven days as traders see further upside for the smart contracts token.
ETH rose from yearly lows around $0.048 on Jan. 9 to set a swing high at $0,061 on the same day.
The ETH/USD appears ready for a breakout despite the ongoing battle between the bears and bulls on the weekly chart.
ETH/BTC weekly chart
The relative strength index (RSI) is showing ETH's bullish divergence against BTC suggesting that the buyers have not given up sending ETH higher.
This was observed by an X user Wolf who posted the following chart on Jan. 12 saying a bullish divergence on the RSI on weekly timeframes is currently a topic of interest for popular traders. He added that the moving average convergence divergence (MACD) indicator had produced a "bullish crossover", suggesting that the market conditions still favored the upside.
The second largest cryptocurrency by market capitalization joins several other large-cap tokens in beating Bitcoin's returns this week — despite the latter celebrating the United States launch of spot exchange-traded funds (ETFs).
To support Ethereum's growing strength against Bitcoin, Michaël van de Poppe, founder and CEO of trading firm MNTrading, saw Bitcoin continuing to lose ground against Ethereum as a part of the combined cryptocurrency market cap.
He posted the following chart in a Jan. 12 post on X saying "#Bitcoin dominance peaking before the halving and potentially marking a cycle top. Altcoins are likely to outperform in the coming period."
Market Cap BTC Dominance
If this happens, altcoins led by Ethereum, are likely to start rallying as the market enters the much-awaited "altcoin season."
The ETH/USD pair has formed a bullish flag on the daily chart projecting a massive move upwards once the chart pattern is confirmed.
At the time of writing, the price was fighting resistance from the upper boundary of the flag at $2,530. A daily candlestick close above this level would confirm a bullish breakout from the drawback with the next line of resistance arising from the $2,600 level.
Higher than that, bulls would have to overcome the barrier at $2,700 before reaching the technical target of the prevailing chart pattern around $3,140. This would represent a 24% increase from the current level.
ETH/USD daily chart
Apart from the significantly bullish chart pattern, ETH's bullish outlook was supported by the upfacing moving averages. In addition, the RSI had begun pointing upwards and the price strength at 59 suggested that the buyers were still dominating the market.
On the downside, failure to rise above the flag could signal the inability by the buyers to sustain the higher levels. As a result, the ETH/USD pair could drop from the current levels toward the lower limit of the flag at $2,415.
Additional lines of support could emerge from the 50-day exponential moving average (EMA) at $2,285 and the $2,200 psychological level, before ETH could revisit the $2,170 swing low.
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