The prince of cryptos remains in expectation! – Although the bear run of Ethereum (ETH) since its last ATH in November 2021 is still relevant, many investors are looking for any means to hold on to something in order to glimpse a reversal favorable trend. But given the current uncertainties in the financial markets, it would be better not to wish for reality. Because the last interventions of the members of the FED, including its president Jérôme Powell, would always lean towards an extension of monetary tightening until the main objectives are achieved.
Despite the good shape of the equity indices since the beginning of October, which could suggest the opposite, the prince of cryptos (or cryptocurrencies in the broad sense) has not been able to take advantage of it. Evidenced by its inability to absorb bad news, when liquidity in the financial markets is limited. As was the case with the bankruptcy of FTX. And besides, the latest technical analyzes tend to show that ETH is dithering between different key levels. So much so that we could be close to witnessing a major movement, either on the side of hope for bulls or capitulation for bears.
In an unenthusiastic market environment, we will scrutinize the possible scenarios of the evolution of the price of Ethereum in the days/weeks to come.
Ethereum in weekly units – Prices failing again below the descending line?
After two consecutive upward weekly candles, Ethereum prices are currently stumbling below the descending line. Even if it is still too early to confirm this technical signal in favor of the bears, let’s wait until Friday evening to decide on the spot. A favorable outcome would remain possible under certain conditions. But in the meantime, the different curves of the Ichimoku Kinko Hyo would not facilitate the task of ending the bear run.
Firstly, ETH prices and the Chikou Span suffer from an extremely negative situation against the Kumo (Ichimoku cloud). Indeed, since last May, they are below the cloud with the risk of discouraging the bulls for a long time in 2023. On the other hand, the Tenkan and the Kijun which are simultaneously flat, could act as resistance around the $1400.
In the event of a non-crossing of the descending line or the resistance of $1400, the prince of cryptos could be ejected towards the support of $1000, close to its lows of the year. And if by misfortune this critical and symbolic level were to fail, the bears would promise hell to the bulls.
On the contrary, in the good sense of the term, crossings above the Tenkan and the Kijun would validate the breakout above $1400, then would open the door to a rebound towards $1700, a resistance that has been a huge concern for the bulls with a view to neutralizing the bear market in Ethereum since its last ATH in November 2021.
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Ethereum in daily units – A skimpy bounce above the Tenkan and Kijun
In daily units, Ethereum prices validated the crossing of the Tenkan. Better still, they allow themselves the luxury of doing the same vis-à-vis the Kijun. And despite their position under the Kumo, this also coincides with a return of the Chikou Span to contact with the lower limit of the Kumo, the Senkou Span A (SSA). However, these favorable technical signals would not allow the bulls to look forward concretely. Because as we mentioned in weekly units, the descending line is currently a barrier.
And if the latter were to be crossed, the prince of cryptos would have the Kumo in his sights. Especially since the Senkou Span B (SSB), not far from the resistance of $1400 would be considered as a resistance with regard to its projected horizontal evolution for the next 26 days. For the bulls to hope to avoid a capitulation of Ethereum, going back above $1400 would become essential. With the hope that prices settle above the Kumo in daily units for as long as possible. And in the event of a return towards the $1700 which would be affirmed, we could finally see the Chikou Span beyond the cloud of Ichimoku.
Otherwise, the bears would try to drive the point home below the levels of the week of the FTX bankruptcy. That would mean a potential drop towards $1000 or even a three-digit Ethereum around $700 or $450 in the context of real stress on the financial markets.
In summary, countering Ethereum’s bear run since its last ATH in November 2021 must imperatively start with price stability for a sufficiently long period, i.e., warding off the threat of a third wave of correction. Hence the importance that the bulls preserve at all costs the support of $1000 in the near future. And from there, hope will remain, despite the future Kumo in weekly units.
However, what worries me through the inter-market relationships between different asset classes is that the equity indices do not give the impression of having finished with their bear run. As a result, their rises since the beginning of October would reflect expectations of a change in the Fed’s monetary policy as soon as possible. But with inflationary pressures clearly high for more than 40 years in the United States, I would fear that the American central bank would not change its position in favor of its credibility.
Therefore, if the last FED meeting on December 13-14 were to result in continued monetary tightening despite signs of economic slowdown or recession, there would be no doubt that net liquidity in financial markets would contract. In which case, the Ethereum bear market (or cryptocurrency market) could enter capitulation mode, should an unpredictable event occur.
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