The prince of cryptos very undecided under major resistance! – Except for a last minute reversal, The Merge (or merger) of Ethereum (ETH) will indeed take place on September 15th. Many investors hope this will be a solid reason to end his bear run since his last ATH in November 2021. But personally, I fear that this historic event around the prince of cryptos will not be enough to change the give immediately. Especially since the market context remains gloomy until proven otherwise.
In fact, as we await the next inflation figures in the United States this Tuesday, it will be interesting to follow the behavior of ETH prices at the time and after the publication. At the time of writing, the latest technical analysis shows a plateau below the resistance at $1700. To the point that a slack could occur despite the proximity of The Merge.
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Ethereum in weekly units – An increasingly worrying status quo
Although Ethereum has held up better than Bitcoin in its recent fall, prices and the Chikou Span still remain anchored below the Kumo (Ichimoku cloud). This status quo, which continues to persist week after week, becomes highly worrying in the medium to long term. So much so that one might wonder if we would not do too much about The Merge reported to the monetary tightening of central banks.
If the rebound mentioned during the previous market point has materialized with the hope of crossing the resistance of $1700, the bearish candle of this beginning of the week temporarily slows down this scenario. In the recent past, it received a false buy signal in August. Freshly warned, the bulls prefer to play for time against the horde of bears. Now, the prince of crypto remains in a waiting position.
In the event of a real crossing of the resistance of $ 1700, the bears could start to worry. In effect, ETH prices could potentially trade above the descending line since its last ATH in November 2021. This would propel them towards the Kijun which behaves in resistance, not far from that of $2300. That being said, there would still be work to do for prices and the Chikou Span to get back above the Kumo in weekly units.
Finally, otherwise, a second failure below the resistance of $1700 could have consequences that could rekindle a return to the lows of the year. In such a way that the support of $1400 would only be an illusion.
Ethereum in Daily Units – Prices Reluctant to Cross the Kumo
Ethereum’s hesitation below $1700 does not happen by chance. Because, in daily units, it coincides for the moment with its inability to free itself from the upper limit of the Kumo, the Senkou Span A (SSA). Especially since this unfavorable technical signal has gained momentum since last Sunday. It would absolutely not be necessary for the prices to break the Tenkan and the Kijun simultaneously for fear that a second throwback on the $1400 support would not hold up graphically.
Not only, ETH prices would drop slightly below the cloud’s lower boundary, the Senkou Span B (SSB). But to make matters worse, the Chikou Span would be on the verge of following them. In any case, everything would seem to be partially in place to release a downside potential that would not be welcome. This would send the prince of cryptos back towards the $1200 support or the triple bottom neck line before resurfacing the threat below $1000.
Even if The Merge is a major event in the evolution of Ethereum, cryptocurrency investors would do well to focus on the essentials. On the one hand, the aggressive monetary tightening by the FED does not favor the risky asset classes most sensitive to liquidity. And as long as the US central bank pursues its plan to the letter, cryptocurrencies will drink the chalice to the dregs. Not to mention the lack of evidence of any decorrelation from equity indices.
On the other hand, long-term technical analysis (in weekly units) would not argue for a trend reversal in favor of bulls. Because even if ETH prices would surpass beyond the descending line of the bear run or the resistance of $2300, the significant thickness of the Kumo planned for the first quarter of 2023 would probably be detrimental in the quest for a new bull run. Thus, caution would be in order without the presence of catalysts that would calm the current uncertainties on the financial markets.
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