The value of Ethereum, the biggest platform for smart contracts, keeps rising against the US dollar, especially after it just crossed the $1,600 mark. Following the Federal Open Market Committee (FOMC) meeting and decision on the interest rate hike in two days, recovery is anticipated to continue.
Cryptocurrencies may typically decline before then, shaking out weak hanging before continuing the bullish rise aiming for highs beyond $2,000, according to experts. At the time of writing, the price of Ethereum had fallen to $1,594 with support at $1,500 projected to withstand the mounting selling pressure.
These are the levels to keep an eye on as Ethereum Price Prepares for a Major Breakout.
Investors are eagerly awaiting the Federal Reserve’s decision on interest rate increases and anticipate that the regulator will keep up its stringent policies intended to restrain economic growth. Market observers anticipate a 25-basis point increase, which is comparatively less than the 50-basis point increase in December.
This upbeat mood is due to the fact that overall inflation fell in December from 7.1% in November to 6.5%. Although the decline is not significant enough for the Fed to entirely let up on the gas pedal, it does show that the economy is moving in the right way.
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The CPI serves as a gauge for the Fed’s decision to either tighten or loosen the monetary restrictions used to fight inflation, allowing markets to rebound, especially those thought to have a high volatility index, such as digital assets.
Despite the barrier above $1,680, the price of Ethereum is still in a position to make a substantial breakout. The price of ETH may have to look down to $1,500 before resuming its climb because the flimsy support at $1,600 has already been breached. The 200-day Exponential Moving Average (EMA) (in purple) on the daily timeframe chart provides strong support there.
A purchase signal from the Moving Average Convergence Divergence (MACD) indicator supports the short-term bearish view for the price of Ethereum. By flipping under the blue signal line, the MACD line confirmed the message to traders to unload their bags while locking in winnings (shaking off weak hands).
Weak hands are being shaken out as the market awaits the FOMC in two days, tweeted Doctor Profit, an analyst, and trader on Twitter. Before the second breakthrough in a few days, the analyst refers to the pullback as a “fake stupid” designed to “shake out weak hands.”
The creation of a falling wedge, whose breakout enabled Ethereum to sustain the climb to $1,680 in January, is shown on the same daily chart. It’s important to note that the current exchange rate for ETH is around halfway through the 46.55% breakthrough objective.
One would anticipate a correction after such a significant climb to $1,947 before another abrupt increase. Despite this, the 200-day EMA’s support is still essential for the uptrend to resume. Bulls may speed up the recovery process, though, by regaining the ground they lost above $1,600.
The probability of a swift rise to narrow the gap to $1,947 and later open the door to gains above $2,000 could change if this support level holds due to an increase in market confidence in the uptrend.
Rekt Capital, a well-known trader, and cryptocurrency expert tweeted to his 334k followers that Ethereum is still in a good position to break through the resistance of the monthly downturn. His chart indicates that such a move would raise the price of Ethereum to $2,275. On the other hand, if this move is unsuccessful, Ethereum may retest its support at $1,068.
Fundamentals to Watch for the Price of Ethereum
There are at least 2.11 million addresses that have previously bought 5.28 million ETH in the range of 1,585 and $1,633. According to on-chain data provided by IntoTheBlock, these addresses are currently in the red (face an unrealized loss) (ITB).
Due to the overwhelming number of sellers in this area, when the price of Ethereum rises, some investors may choose to sell at different breakeven thresholds, which would increase overhead pressure. As they drive the price of ETH to higher peaks, bulls must be prepared for such circumstances.
Ethereum might reach the wedge breakout goal at $1,947 and possibly move above $2,000 with just a clear break above the current huge seller congestion.
On the other hand, as shown by the green circles, Ethereum support is located over groups of medium-to-strong support zones. As a result, the current decline might not go much lower than $1,500. Additionally, it supports the previous pricing analysis.
The Fed’s decision to raise interest rates will have a significant impact on the bullish forecast for Ethereum’s price. Below confirm a long-term bullish trend in ETH, a break above $2,000 is necessary but dips to $1,500 and the 100-day EMA (in blue) at $1,400 cannot be ruled out for the time being.
With that said, the price of Ethereum may have a difficult time breaking through to $10,000 in 2023. The token may, however, be on the verge of reaching its record high of $4,878, particularly if bulls sustain the second recovery phase of over $2,000 over the next few days, if not a few weeks.