Source: PaxForex Premium Analytics Portal, Fundamental Insight
Ethereum's native token, Ether (ETH), has experienced a decline in value, currently trading at around $1,638, marking a drop of almost 7% today. This downward movement can be attributed to a combination of fundamental and technical factors.
One significant factor impacting Ethereum's price is the Federal Reserve's recent hawkish stance. On June 15, Ether's price experienced a 1.7% decline, reaching its lowest level in three months at around $1,620. This drop in price aligns with a broader downtrend observed throughout the week, which was further accelerated by the Federal Reserve's announcement.
Although the U.S. central bank decided to keep benchmark interest rates unchanged due to a slowdown in inflation, Federal Reserve Chairman Jerome Powell emphasized that they plan to raise rates more aggressively than anticipated by investors in 2023. Powell's statement indicated that interest rates would only be raised once there is a meaningful and significant drop in consumer prices.
Since Powell's announcement, the price of ETH has decreased by approximately 7.5%, reflecting market reactions to the Federal Reserve's hawkishness.
In recent years, Ether has exhibited characteristics of a riskier asset, displaying a strong positive correlation with major U.S. stock indexes. This trend continued on June 14 and 15, as the price of Ethereum dropped alongside the S&P 500, the Nasdaq Composite, and the Dow Jones.
The recent decline in Ether's price has triggered a wave of liquidations for leveraged long positions, amounting to $54.95 million on June 15, the highest among the top-ranked crypto assets. Additionally, the open interest in Ether-related contracts decreased from nearly $6 billion on June 14 to $5.69 billion on June 15. This indicates that long traders closed their positions by selling ETH, potentially contributing to the downward pressure on its price.
On May 15, Ether experienced a selloff that was exacerbated by breaching a critical support level, which included multi-month ascending and horizontal trendlines and the 200-day exponential moving average (200-day EMA) around $1,750.
Despite these developments, there is potential for Ether to recover a portion of its recent losses in June. The daily relative strength index (RSI) for ETH/USD has dropped below 30, entering the "oversold" territory, which typically precedes a rebound or consolidation.
Furthermore, when looking at longer-term charts, there are indications of potential recovery for Ether. Notably, the ETH/USD pair is still trading above its 200-week EMA, which has served as a psychological support level since March 2023, located near $1,600.
The support of the 200-day EMA aligns with the lower trendline, forming what appears to be a bull flag pattern for Ether.
Based on this pattern, there is a high likelihood of Ether experiencing a rise towards the upper trendline, located around $1,850, following a decisive rebound from the lower trendline. This potential upward movement would represent an approximate 15% increase from the current price level.
Moreover, if there is a breakout above the upper trendline of the bull flag, it could propel the price of ETH toward $2,500 as the next upside target for 2023.
Conversely, in a bearish scenario, a drop below the lower trendline of the bull flag could exert further downward pressure on the price of Ether. In such a case, ETH price may potentially decline towards the support range of $1,400-1,450, which was significant during the first quarter.
As long as the price is below 1800.00, follow the recommendations below:
- Time frame: D1
- Recommendation: short position
- Entry point: 1688.00
- Take Profit 1: 1550.00
- Take Profit 2: 1450.00
Alternative scenario:
If the 1800.00 level is broken-out, follow the recommendations below:
- Time frame: D1
- Recommendation: long position
- Entry point: 1800.00
- Take Profit 1: 1930.00
- Take Profit 2: 2000.00
