The prince of cryptos saved by the bell? – Volatility is in full swing around the price of Ethereum (ETH). In an unfortunate position last Friday, it however resumed its march forward towards $1700, a major resistance that the bulls are facing without success so far. Given the damage caused by the failure of Silicon Valley Bank (SVB) on the American banking sector, one would have expected worse. But this unforeseen event could force the FED to revise its monetary policy. This would explain the return to favor of cryptocurrencies, and therefore a prince of cryptos who has just gained nearly 24% in 72 hours.
Although the latest technical analyzes temporarily dismiss the threat of a consolidation under $1400, the bulls would do well to keep their feet on the ground. Nothing says indeed that the FED is ready to play Santa Claus before the hour. Indeed, its credibility in fighting inflation could explode in midair. But on the other hand, the risk of contagion to the entire US banking sector would drag the economy into a deep recession.
In a market context where the FED would eventually face a dilemma, let’s see how the price of ETH could pull itself out of its slump of the last few weeks or sink deeply below its next supports.
Ethereum in weekly units – A start to the week with a bang
Sometimes we have to admit that a badly started situation can turn around at any moment. On the verge of stalling under $1400, the price of Ethereum recovered over the weekend and then started the week with a violent rebound which took the bears by surprise. And as we speak, it is evolving not far from $1700. The bulls dream again of a crossing of this major resistance. With the hope that the turmoil in the banking sector will cease before the next Fed meeting on March 22.
Despite the current attempt to go back above the descending line, it is clear that the courses and the Chikou Span still remain blocked under the Kumo (Ichimoku cloud). Especially since the reasons for this rebound linked to a possible relaxation of monetary tightening by the FED, could be questioned. It will be recalled that the American central bank recently affirmed that further rate hikes would be in sight to combat inflation.
Assuming we continue the momentum of the start of the week, the bulls would potentially see their wishes granted. With a BTC course that would validate both successive crossings beyond the descending line and $1700. And in case of rebound widening, it would approach an entry inside the Kumo, which itself would constitute a major signal for the neutralization of its bear run since his last ATH in November 2021
Conversely, another failure below $1700 would bring the prince of cryptos back to where he was last Friday. He would put back in the saddle the bears who could knock down their last cards. A break of $1400 would unfortunately increase the likelihood of a move back towards $1200 or its lows of last year, around $1000.
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Ethereum in Daily Units – Excessive Bounce?
In daily units, Friday’s hangman at $1400 was followed by three consecutive large upward candles. They allowed the prince of cryptos to rally spectacularly towards $1700, then slightly above the descending line. At the same time, prices and the Chikou Span are taking advantage of this unexpected short-term windfall to get back above the Ichimoku cloud.
Nevertheless, climbing so quickly towards $1700 might seem excessive to us given a market context that had tightened in the space of a few days. The bulls could still break their teeth under this major resistance. Because by dint of bumping into a wall, they could fear a fatal relapse below $1400, which recently was narrowly avoided.
In this sense, if the price of Ethereum once again drops below $1,700, it would be possible to witness a consolidation that would destroy a good part of the rebound at the start of the year. On the sine qua non condition that the bears are able to sink $1400. Which would correspond to courses and a Chikou Span that would slide under the Kumo. In which case, we would open the door to the worst-case scenario, the possibility of a new wave of correction in the event of a rapprochement towards $1200and therefore to an unfavorable chart alignment in both daily and weekly units.
In the event that rumors seriously swell about a possible pause in monetary tightening by the FED, this could finally translate into a real resurgence of the prince of cryptos above $1700. Bulls would aim for $2000, but they should watch out for a resurgence of excess buying signals to the extent that the price of ETH would move away from the Tenkan. With the fear that the US central bank would not hear it that way at the next monetary meeting.
In summary, the formidable burst of pride in the price of Ethereum towards $1700 maintains the prospect of a neutralization of its bear run since its last ATH in November 2021. But the more time passes under this major resistance, the more the bulls may become discouraged. To the point that they would admit at some point their capitulation.
With important macroeconomic events arriving this week such as the latest US inflation figures released in the early afternoon, we may have future indications on the evolution of the Fed’s monetary policy. A good number could ease tensions in financial markets ahead of the March 22 FOMC meeting. In which case, the prince of cryptos would maintain his recent favorable momentum with the idea of clearing the $1700. On the other hand, a bad number would probably cool the bulls. And that would provide arguments for the US central bank to raise rates. Thus, the threat of a rally in the ETH bear could resurface.
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