The Ethereum market pulled back significantly on Friday to reach down towards the 200-day EMA. The 200-day EMA is an indicator that a lot of people pay attention to, and the fact that we bounced from that level also suggests that a lot of people are paying attention to the indicator as per usual, and it is also worth noting that we have seen a “V pattern” form initially as well.
You see that the low was right at the 61.8% Fibonacci retracement level as well as the $3000 level, which is a large, round, psychologically significant figure. That being said, this bounce is trying to set up something a little bit bigger, and the candlestick from the Friday session makes sense. In general, this is a market that I think continues to try to build a certain amount of support and momentum in this area, which will take a certain amount of time due to the fact that we had broken down quite drastically. The selloff was brutal, so people are going to be a little bit cautious about dipping their toe into the water of a market that has been crushed like Ethereum and other crypto markets have been.
To the upside, I see the $3500 level as an area that could be interesting as a target, and there will be a certain amount of psychological resistance, but I do not necessarily think that it is going to be a big deal. After that, the market is likely to go looking towards the 50 day EMA, which is sitting at the $3800 level. The market is likely to see a lot of noise in that area. Nonetheless, with the significant pullback, I do think that Ethereum is essentially getting close to stopping the selling, and I think it is only a matter of time before we find momentum coming back into this market. While we did sell off extensively due to the Federal Reserve tightening monetary policy, that is a “known known” at this point in time and I think the damage has been done. At this point, people are starting to focus on Ethereum 2.0, which is coming later this year.
