Source: PaxForex Premium Analytics Portal, Fundamental Insight
The cryptocurrency market remains under pressure, joining most asset classes and confirming once more that it has a strong correlation to all assets except for gold. Volatility appears to be receding, which is a positive development and points towards more maturity in this sector. Traders must deal with several bearish long-term developments, ranging from economic to political uncertainty, primarily a slowing economy, high inflation, and elections starting to change the geopolitical landscape. Military conflicts apply upside pressure on commodities, threatening tight supply chains, and global debt crushes future policies and depresses long-term growth potential. It explains why cryptocurrencies struggle near bear market lows.
Meme coins dominate the headlines, but first-generation projects like Ethereum, which holds on to its number two spot as the biggest cryptocurrencies by market capitalization, show signs of attractive entry opportunities. Among the most exciting opportunities is the presale of Ethereum BSC, offering traders who missed the Ethereum wealth generation a second chance to participate. Another area for Ethereum supporters to focus on is the plunge in network fees, which dropped 90% from its peak in May 2023 to record its lowest level since April 2020. High network fees, known as gas, were the primary concern of Ethereum users
Over the past six months, NFT trading and DeFi yield farming, which carried the blame for high network fees, collapsed with the price of cryptocurrencies. Ethereum also increased scale and network capacity via layer 2s, setting the stage for faster and cheaper transactions. While it presents a bullish scenario, Ethereum faces legal and regulatory issues from the US, keeping the upside momentum in check. Many view the SEC versus XRP battle as a blueprint, and should it play out that way, Ethereum could enjoy significant upside, potentially challenging the 2,000 level.
The forecast for the ETH/USD turned cautiously bullish after this cryptocurrency pair stabilized inside its horizontal support area. Following a bearish crossover, the Kijun-sen remains flat, with the Tenkan-sen descending. The narrowing Ichimoku Kinko Hyo Cloud suggests more volatility ahead, but the Senkou Span moves higher and the Senkou Span B lower, with a bullish crossover likely. Traders should also monitor the CCI after a positive divergence in extreme oversold territory resulted in a breakout. This technical indicator has plenty of upside potential, and a move above zero could trigger the next leg up. Can bulls regain complete control over the ETH/USD and 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 $1,550 to $1,585 zone, PaxForex recommends the following trade set-up:
- Timeframe: D1
- Recommendation: Long Position
- Entry Level: Long Position @ 1,575
- Take Profit Zone: 1.725 – 1,775
- Stop Loss Level: 1,515
Should price action for the ETH/USD remain inside the or breakout above the $1,550 to $1,585 zone, PaxForex recommends the following trade set-up:
- Timeframe: D1
- Recommendation: Short Position
- Entry Level: Short Position @ 1,515
- Take Profit Zone: 1,420 – 1,460
- Stop Loss Level: 1,550
Open your PaxForex Trading Account now and add this currency pair to your forex portfolio.
