- Ethereum markets rallied ever so slightly during the day, gaining 2%.
- The market has recently seen a lot of choppy noise in this area, and I think that will probably continue to be the case as we are trying to break out, but do not have a catalyst at this point.
- The $1800 level above is significant resistance that extends to the $2000 level, so breaking through all that is the goal by the bullish traders out there, but I don’t necessarily think that they have the momentum, at least not at the moment.
It's All About Risk Appetite
Pay attention to risk appetite overall, because obviously crypto is pretty far out on that spectrum. As long as risk appetite is strong, that does help crypto, and then by extension Ethereum. Ethereum is also going through a Renaissance in the sense that the upgrade is coming. This is part of what has been driving Ethereum higher, but now we have to ask serious questions, not the least of which would be whether or not it actually happens on time.
A pullback at this time would make a certain amount of sense, with the 50-day EMA underneath offering support, just above the $1200 level. That would be an ideal area for support to come back in and lift the market, assuming that the buyers are willing to make it stand. That being said, if the market were to break down below the $1200 level, then it’s likely that will we go back down to the $900 level. Anything below there could open up the floodgates the much lower pricing. I don’t necessarily think that will happen either, at least not in the short term.
Pay attention to the central bank situation, because if the Federal Reserve continues to flex its muscles and tighten monetary policy, that does tend to work against risk assets like Ethereum. Granted, Ethereum is in its own world at the moment due to “The Merge”, but that doesn’t mean that it cannot start selling off with everything else. If we were to break above the $2000 level, it would almost certainly kick off the next major bull run, but I don’t think that happens without some type of outside catalyst. In the short term, expect a lot of choppy behavior in more of a sideways type of market.
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