Ethereum’s native token Ether (ETH) gained alongside riskier assets as investors weighed in on weak US economic data and its potential to cool rate hike fears.
Ether reflects risk recovery
ETH price rose as much as 8.31% on June 24 to $1,225, six days after dipping below $880, its lowest level since January 2021.
Usually, the bullish pullback brought bulls a 40% gain, raising anticipation about an extended rally in the future, while allaying fears of a “clean fakeout”.
For example, the independent market analyst “PostyXBT” Project that the price of ETH would close above USD 1,300 at the end of June.
Conversely, analyst “Wolf” feared that the bears would try to “push the price back to $1,047”, although he anticipated a rally towards $1,250 if ETH holds above its diagonal trendline support, as it’s shown in the following.
$ETH 4h.
If the trend change is real, then we will soon find out. Bulls must hold this diagonal and see this type of scenario.
Bears, instead will try to push price back to 1047 pic.twitter.com/PRG9fD4iRz— Wolf (@IamCryptoWolf) June 21, 2022
$ETH in 4 hours.
If the change in trend is real, we will soon know. Bulls should hold this diagonal and see this type of scenario.
The bears will instead try to push the price back to 1047
Ether has come under pressure from the aggressive policy of the Federal Reserve in 2022. But those fears appear to be fading after the latest composite report from US purchasing managers showed manufacturing activity fell to a five-month low.
“Growth is slowing down, maybe even sooner than expected,” Esty Dwek, chief investment officer at FlowBank, told the Wall Street Journal, adding:
“That should allow the Fed to soften at some point.”
Still, Greg Peters, co-chief investment officer at PGIM Fixed Income, warned that the current rally in risk markets may not last. He is not convinced that “central banks are going to stop tightening monetary policy if economies slow down.”
Classic bullish reversal setup in play
Ether’s bounce on June 24 also caused it to break above a descending resistance trendline that constitutes an “inverse head and shoulders” (IH&S) pattern.
Specifically, Ether has formed the IH&S pattern after forming three troughs below a common support level, called the neckline. Also, the middle channel is deeper than the other two, which are about the same height.
Traditional analysts view the IH&S as a bullish reversal setup, i.e. they resolve after the price breaks above its neckline support. As a general rule, the price could go as high as the high of the IH&S after the breakout.
As a result, Ether sees an extended bullish pullback towards $1,560 after breaking above its IH&S neckline, up nearly 33% from current price. Interestingly, the IH&S profit target coincides with ETH’s 200-4H exponential moving average (200-4H EMA; the blue wave) near $1,537.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.
Investments in crypto assets are not regulated. They may not be suitable for retail investors and the full amount invested may be lost. The services or products offered are not aimed at or accessible to investors in Spain.