Yesterday Bitcoin jumped following the news that Greyscale won the lawsuit against the SEC as the D.C. court ruled that the SEC improperly rejected the Bitcoin spot ETF. This was seen as a positive news as Greyscale will have to reapply for a spot ETF but that an ETF is actually coming. This news has lifted all the other cryptocurrencies, including Ethereum, as there’s a tight correlation with Bitcoin. Looking at the bigger picture though, we have some bearish news all around as CryptoQuant reported that Bitcoin trading volume is at its lowest in more than four years and on the macro side we have recessionary fears caused by weakening data as yesterday's Job Openings and Consumer Confidence missed expectations by a big margin possibly pointing to a deterioration in the labour market. On top of that, the central banks are expected to keep monetary conditions tight even if we start to see more weakness creeping in, which should ultimately make the economic conditions and the risk sentiment worse.
Ethereum Technical Analysis – Daily Timeframe
On the daily chart, we can see that Ethereum after a two-week long consolidation around the support level, jumped following the news of Greyscale winning the lawsuit against the SEC. The spike higher is getting rejected by the 61.8% Fibonacci retracement level where we have also the confluence with the red 21 moving average. This is where the sellers are likely piling in with a defined risk above the level to target another selloff into the lows.
Ethereum Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the spike higher might have opened the door for more upside and we have a good support zone around the 1681 level where we can also find the Fibonacci retracement levels and the red 21 moving average. This is where we can expect the buyers to step in with a defined risk below the black trendline looking for another extension to the upside.
Ethereum Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see more closely both the bearish and the bullish setups. If the price manages to break below the black trendline, then the bullish setup would be invalidated, and we will likely see much lower prices with the first support coming around the 1400 level. On the other hand, upside breaks should support the buyers going forward and lead to higher highs.
Upcoming Events
This week is an important one given that we will see many key labour market data for the US, including the NFP, before the next FOMC meeting. Weak data is likely to cause recessionary fears across the markets and weigh on Ethereum, while strong readings should keep the Fed on the hawkish side and put a lid on the cryptocurrency’s upside. Today, we have the US ADP report, and after yesterday’s big miss in the US Job Openings, a weak report is likely to increase recessionary fears. Moving on to tomorrow, we will see the US Jobless Claims and the US PCE data. Finally, we conclude the week with the US NFP and the ISM Manufacturing PMI on Friday.