Beware of a new disappointment on the prince of cryptos! – Buoyed by the hope of a passage of a pivot of the FED (movement from a restrictive monetary policy to an accommodating monetary policy) last week, cryptocurrencies are raising their heads somewhat. With in the forefront, the price of Ethereum (ETH) which has just crossed – momentarily? -its 2017 ATH. Will this be enough to regain investor confidence in this asset class that took off last spring?
If the last few days have been favorable to the prince of cryptos, experience suggests that a bear run is not erased so easily. We recognize the courage of many investors, but sometimes it’s better to accept the harsh reality of the financial markets and know how to balance our risk management. However, in the short term, the latest technical analysis of ETH prices gives credence to bulls. To the point that the bears could get tired by paving the way for a rebound that could test the next resistances.
Pending the FED’s decision on the evolution of its monetary tightening, could the recent rebound in Ethereum, which began last Tuesday, have the flavor of the beginning of a neutralization of the bear run? Or that of yet another bull trap since his last ATH in November 2021?
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Ethereum in weekly units – Prices about to break through the descending line?
Last week was a good one for Ethereum. In effect, the prices are currently at the contact of the descending line of the bear run. At the same time, they take advantage of this to go back beyond the Tenkan, then approach the Kijun in weekly units. From there to what the bears really tremble, I would rather say that the bulls offer themselves a breath of fresh air temporarily compared to the threat of new lows of the year. And even if the downward line is crossed.
Assuming this idyllic scenario plays out, bulls shouldn’t get too carried away with the euphoria. First of all, ETH prices and the Chikou Span despite this potential rebound, will still remain below the Kumo (Ichimoku cloud). Secondly, at the risk of once again frustrating many investors, the Kumo projected for the first and beginning of the second quarter of 2023 continues to widen with a lower limit (Senkou Span A) which tends downwards. And lately, the Kijun has been dropping significantly since mid-September.
Although these three unfavorable technical signals are not real surprises so far, I have unearthed another one that could prove fatal. With an eye on a possible rise of the prince of cryptos towards $1700, the Chikou Span is likely to collide directly under the prices of the underlying in the coming weeks. And therefore under the resistance in question. In which case, a third failure below $1700 would jeopardize the rebound with a view to a reintegration of prices inside the Kumo in weekly units.
Ethereum in daily units – Prices above Kumo?
Thanks to last week’s excellent bullish candle, Ethereum prices have been in the ability to re-enter Kumo in daily units. At the same time, they would be on the verge of crossing it in addition to being in contact with the descending line. With the objective that the 1700$ are quickly reached. In the event of catching up with what has been lost since last spring, bulls would dream of ETH heading towards the resistance of $2300.
However, let’s not bury the bears yet. Because precisely, a simultaneous rejection below the upper limit of Kumo and the descending line would cause prices to slide towards $1400. But if the rebound since last Tuesday was based on an optical illusion, beware of the possible rupture of the recent ascending line which would cause ETH to fall back below the cloud. With the fear that prices will return to the lows of the year, not far from the support of $1000.
Even if the last week gave wings to the cryptocurrency market, the fact remains that caution prevails. As proof, Ethereum is currently hesitating under major technical signals, despite being above its 2017 ATH. cryptos like the drop in the Dollar Index and the de-escalation on bond rates, would not really hold up.
Not only the Fed would not intend to inject liquidity into the financial markets anytime soon. But not doing enough to stabilize inflation within acceptable standards would tarnish its reputation vis-à-vis the financial markets. And given the factors preventing it from being lowered, the US central bank might extend its monetary tightening whether it likes it or not.
Therefore, if this week’s FED meeting were to hold no ground for hope on an easing of its monetary policy, the likelihood of another bull trap in Ethereum (or cryptocurrencies at large) could emerge. . With the possibility that a third wave of correction under the sign of a true capitulation would sign a stinging defeat for the bulls.
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