Source: PaxForex Premium Analytics Portal, Fundamental Insight
The Bitcoin-inspired sell-off has applied downward pressure on the entire cryptocurrency sector, but the bearish implications begin to fade as long-term investors seek entry opportunities to add to their portfolios. The massive correction also eliminated many speculative positions, allowing stability to return to established projects. Ethereum faces a standoff between bulls and bears, which could result in a volatility spike.
Short-term selling pressure increased after Ethereum co-founder Vitalik Buterin transferred 600 Ether worth an estimated $1 million to Coinbase. The amount is less significant than the message, as his past transfers usually witnessed more selling. Some fear Ethereum could drop to the psychological 1,000 support level, which it challenged in December 2022, before accelerating throughout 2023 to record a 100% gain. Countering some negative bias is a long-term ascending support level on the W1 charts, making the current support level a make-or-break case for bulls and bears alike. As long as price action remains above 1,540, bulls remain in control, and Ethereum should gradually claw back most of its losses.
One long-term bullish catalyst for Ethereum is the potential of the US SEC to approve a series of Ethereum and Bitcoin-Ethereum futures ETFs. The SEC may not green-light all 16 applications, but it would represent a significant step forward, adding liquidity for physical Ethereum. Futures contracts are legally binding agreements that require delivery of the underlying asset. Asset manager Valkyrie appears to lead the ETF push and could launch as soon as October. Additionally, the SEC may permit a spot Bitcoin ETF, but the decision will not come until January 2024. The overall positive shifts in the US cryptocurrency sector, supported by Wall Street firms, including Fidelity and BlackRock, should provide a bullish development for long-term price action into 2024.
The forecast for the ETH/USD turned cautiously bullish following a massive one-week sell-off into its horizontal support area. Traders should remain vary of short-term bearish pressures. The Ichimoku Kinko Hyo Cloud has flatlined and acts as a significant resistance level with a bullish bias, which could act as a magnet and attract price action. Volatility could remain elevated with the Kijun-sen and the Tenkan-sen moving lower. Traders should also monitor the CCI, which began to move higher in extreme oversold territory, gathering upside momentum. A breakout above -100 could grant bulls the necessary spark to push this cryptocurrency pair higher. Can bulls overpower bears and regain control over the ETH/USD and pressure-pressure price action into its horizontal resistance area? Subscribe to the PaxForex Daily Fundamental Analysis and earn over 5,000 pips per month.
Should price action for the ETH/USD remain inside the or breakout above the $1,645 to $1,685 zone, PaxForex recommends the following trade set-up:
- Timeframe: D1
- Recommendation: Long Position
- Entry Level: Long Position @ 1,660
- Take Profit Zone: 1.822 – 1,862
- Stop Loss Level: 1,620
Should price action for the ETH/USD breakdown below $1,645, PaxForex recommends the following trade set-up:
- Timeframe: D1
- Recommendation: Short Position
- Entry Level: Short Position @ 1,620
- Take Profit Zone: 1,500 – 1,540
- Stop Loss Level: 1,645
Open your PaxForex Trading Account now and add this currency pair to your forex portfolio.
