We have a huge couple of weeks ahead from a macro standpoint. The Fed will be the focus of attention from crypto’s perspective.
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Macro vs Technicals
We have a huge couple of weeks ahead from a macro standpoint. The Fed will be the focus of attention from crypto’s perspective. A 25bp hike is almost guaranteed, and the forward guidance is likely to remain hawkish while acknowledging the continued slowing of inflation – but more evidence of that being sustained is needed. Employment, as always, remains key to the strength of the economy. All eyes are on payrolls the following week.
Ethereum vs Bitcoin
We have moved into a range between a rock and a hard place. Resistance at 0.06450 is holding firm after rising to this level from the 0.0605 lows. The longer the resistance holds, the more chance there is for another leg lower to next Fibonacci support region around 0.057.
A clear break and close above 0.06450 would suggest the recent range breakout was a false move and we are reverting back into the previous range. A gradual move back towards 0.068-0.071 is within that process.
Prices are back to the ‘flag’/channel support, with the pattern viewed as a 5th wave. As such, in the short term my studies are looking for a break of this support opening a move back into the 27,000-26,600 weekly trend support region. That is where the market needs to develop a higher low if the bull phase from last November’s low is going to extend into the 33,000-36,000 resistance zone.
A failure to hold that support area would suggest that we have developed a medium-term high for a move back into a range. A break of the lows from June this year at 24,770 would confirm that is the case and that we should expect further weakness but only within an 18,500-31,500 type range for up to another 12 months.
Long term, my studies suggest the bear cycle from the 2021 highs completed last year around 15,500. We have held under the first resistance zone at 33,000, so now, as highlighted above, the question is whether we continue to build to 36,000 and then 42,000, or drop back into a medium-term range first.
The underlying wave structures remain constructive, but the coming 1-2 weeks are going to be important. Prices are currently holding under 2041 Fibonacci resistance, having rallied in 5-waves to that region.
We are likely to see a broader corrective pullback which should develop a higher low in the 1800-1720 region. If that is the case, we should then see Ethereum extend the bull phase through the April highs and onto next resistance around 2450.
However, we are at an important medium-term juncture. The risk is that the move from the 2022 lows is just a 3-wave correction process, with wave C completing in April this year. A decline through 1720 and then the 1630 low from June would confirm that is the case and signals we are likely to remain in a lower range between 1000 and 2160 for potentially another year.
From a longer-term perspective, the reversal from last year’s low has reached the lower region of resistance in the 2170-2450 zone. As highlighted above, the coming weeks will help determine whether we building for a move not only to 2450 but 3000 in the longer term, or we are going to remain trapped in a lower range for up to another year first.