A week of general correction in the markets that had a clear turning point last Tuesday after the CPI data was released in the US, which was higher than experts expected.
This increase in the CPI (both monthly and annual) may lead to a hardening of the Fed’s discourse regarding the measures taken so far to alleviate inflation, as everything suggests that they are not enough to achieve this goal.
This news generated widespread panic in the financial markets that also affected the crypto market, where $BTC closed the day with -10%, after making an exponential downward movement at the time of the announcement of the data.
This move came from the monthly highs zone, $22.5K, where previously a bearish divergence in the RSI was detected in that resistance zone, as we can see in the 1h chart.
This leaves us with a situation of reversal of last week’s movement, which is clearly seen on the 3-day candlestick chart, which undoes the rise of the last 6 days in one candle and leaves us with a situation with prices very close to the support zone ($17.5k-$18.5k) that currently supports the price.
Another notable event this week has been the ETH Merge process that ended this phase with this message from @VitalikButerin:
You can find more detailed information in the live broadcast offered by our colleague Adrian Sanchez Rodriguez ✵, providing clarity to this matter:https://www.linkedin.com/embeds/publishingEmbed.html?articleId=8132348178006659531&li_theme=light
Despite the success of the network merger, the price of $ETH has also deteriorated during this week, in which the most prominent tokens are those that lose less, as is the case of $ATOM or $CHZ that we analyzed in previous weeks and that are approaching the weekly close with a result of -1% or $COMP which is one of the few tokens that close the week in positive.
That is why this week I wanted to analyze the $ETH chart, which has had a higher volatility during this month due to this merger in the network.
$ETH is immersed since the end of 2021 in a downtrend that took its price to the $1000 area in June. There we found the strongest support zone with up to three supports before the price bounced and reached the $2000 level, where the maximum of reference is located to begin to see an uptrend in case the price managed to break it, therefore it would be the first Resistance to take into account.
Within this downtrend an ABCD movement was detected with a retracement to the 0.50 Fibonacci level targeting the $1000 mark (1.0 level of the Fibonacci extension).
The subsequent bounce has reached the 0.618 level of that same Fibonacci extension, creating the logical retracement of this pattern. But now an area of indecision is created where two options are possible:
Higher lows can start to occur at the lower end of this range, but until we see highs that break the $2000 resistance we will not see the start of an uptrend.
On the other hand there could be a retest of the support zone which will involve us paying special attention as we will see if this is macro support or if there is a breakout which could lead to the next Fibonacci Extension target.
If we move the chart to 1h candles, we can see how there is a confluence zone at $1280-$1380, which so far is the short-term support zone as it left that sequence of rising lows.
It also strikes me that a bullish divergence is taking place on the RSI, which could lead to a short-term recovery that would lead the price to look for short-term resistance that we have at $1,550 and $1,800, but for now the dominant trend is still bearish.
Finally, remember that nothing discussed in our articles can be considered as investment advice. Everyone must do their own analysis and develop their own trading strategy. The Belobaba Crypto Fund team only shows our analysis and investment tools, and how they help us in our operations when making decisions.