After the 2022 plunge, major cryptocurrencies bounced during the first half of the current year, with ETH/USD posting gains of around 60% during that time. The recovery though was contained by the 23.6% Fibonacci of the 2021 record high/2022 low slump and runs a losing third quarter. Last week it formed a technical Death Cross as the 50Days EMA moved below the 200Day EMA, which is often viewed as precursor of sustained weakness.
The popular altcoin is weighed by an adverse regulatory environment, primarily in the US, where the Securities and Exchanges Commission (SEC) has adopted an aggressive stance, viewing cryptocurrencies as securities. The complex nature of the issue is evident in some recent diverging court rulings on the matter. The strategy of the SEC is definitely being challenged and the crypto world scored a victory in late August, but Ethereum saw only a temporary bounce.
At the same time the US Dollar advances since mid-July, after Fed Chair Powell kept more rate hikes in play and his Jackson Hole speech last month had a hawkish tilt. Along with a tight labor market and resilient economy, the higher for longer narrative has gained traction.
Markets however price in a pause by the Fed at next week's central bank bonanza, in a decision that could determine the trajectory of ETH/USD and so can Wednesday's US CPI inflation report.
The cryptocurrency is in tough spot technically and fell to six-month lows yesterday. It is vulnerable to 1,367, but it may be early to for deeper losses towards and beyond 1,148. ETH/USD reacts higher today and this may provide the opportunity to challenge the EMA200. Daily closes above it could pause the bearish momentum, but does not inspire confidence and the upside is unfriendly.
Senior Market Specialist
Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.
With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.