Ethereum (ETHUSD) shows the potential to self-inspire major gains – both absolute and versus Bitcoin (BTCUSD) – with the ETH/BTC pair nearing annual highs, and it seems not only the ongoing hard fork is behind the improvement. As of today, September 9, ETHUSD gained over 6% to $1706 whereas BTCUSD advanced by only less than a half of that, 2.92% to $20,686.

The ETH/BTC ratio, a closely watched measure of the relative valuation of the world’s two largest cryptocurrencies, briefly crossed 0.085 on Wednesday September 7 (see the chart), its highest level since December 10, 2021.

So, Ethereum’s migration to a greener environment with Proof of Stake consensus is absolutely one of the most important events in crypto in years. With that said, macroeconomics once again are overshadowing crypto news with a full-blown energy crisis in Europe. As traders figured out quite tight correlation of crypto with all risky assets – first and foremost, equities – it's hard to expect the goodness of PoS is for ETH to be enough for its lasting bullish spree, if equities tank.

However, fundamentals aside, the bullish signals come from a classic technical pattern called the inverse head and shoulders, which develops when the price forms three troughs below a common support level known as neckline. The middle trough, or head, is deeper than the other two, called the shoulders.

An inverse head and shoulders setup resolves after the price breaks above the neckline while accompanying an increase in trading volume. As a rule of technical analysis, its profit target comes at a length equal to the maximum distance between the head's lowest point and the neckline.

So far, Ethereum has painted a similar pattern, and it now awaits breakout above the neckline.