Fans of technical analysis should watch Ether’s daily chart today, which shows that the cryptocurrency that popularized smart contracts may soon break out of what’s known as a triangular consolidation in favor of a strong upward directional movement.

Simply put, since May 12, Ether, the second-largest cryptocurrency, valued at $227 billion, has been trading in an extremely tight range, with decline limited to around $1,700 and several rebounds shallow prices, marking a bullish failure between $2,000 and $2,150.

In other words, the cryptocurrency has formed a descending triangle on charts identified by trendlines connecting lower price highs (shallow price bounces) and horizontal support, in this case at $1,700.

Created in 2015, Ethereum is best known as the first blockchain allowing software developers to write an unlimited number of sophisticated operations, called smart contracts. To date, eight of the top 20 cryptocurrencies by market cap are said to be Ethereum Killerssmaller competitors trying to build more efficient alternatives.

A UTC close above the upper end of the triangle would confirm a breakout and imply a bearish to bullish trend change, opening the doors to resistance at the 50-day simple moving average (SMA), currently at $2,338 and $2,418, the 38.2% Fibonacci retracement from the sale of the April high to the May low.

Ether, however, was trading under pressure at press time and appeared on track to test the lower end of the triangle at $1,700. A UTC close below would signal a continuation of the broader downtrend and shift focus to deeper support at $1,420, the price at which Ether peaked in January 2018.

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Whether the triangle ends in a bullish or bearish breakout is anyone’s guess. That said, the bullish divergence in the Relative Strength Index and last week’s Doji candle suggest downtrend exhaustion. Therefore, a breakout seems likely.

An RSI is a popular technical indicator for assessing overbought and oversold conditions. A bullish or positive RSI divergence occurs when the indicator forms a higher low even as the asset tests or falls below its recent low price, as happened in the ether market last month.

While Ether fell to $1,700 on May 12 and 27, the cryptocurrency’s late May slide towards psychological support saw the RSI hit a low higher than on May 12. The divergence indicates that the downtrend has run out of steam.

Ether formed a Doji candle last week as it ended the period on a flat note after trading between $1,735 and $2,015. The candle is identified by long upper and lower wicks, representing the trading range and a relatively small body, indicating a flat close.

Such price action reflects indecision in the market and represents bearish exhaustion when it appears after a notable sell-off, as in the case of ether.