Fundamental analysis

Technical Analysis of ETH/USD for October 27, 2022

Crypto Industry News:

Merge Ethereum was a landmark event. Many people agreed that this is undoubtedly one of the key events in history – not only Ethereum, but all cryptocurrencies. Some expected the mechanism to change from proof-of-work to proof-of-stake. Many people also expected increases, and some thought that changing the mechanism could cause Ethereum to dethrone Bitcoin.

However, after Merge, we saw declines instead of increases. And since around September 20 it has been in consolidation, only yesterday we could notice a bigger move.

The transition to the proof-of-stake mechanism was to reduce the daily supply of ETH by approximately 90%. Inflation was supposed to be close to 0, and some expected deflation. The smaller supply combined with low inflation made the market expect increases. Some expected a “supply shock”, ie a situation where there are many buyers but a shortage of resources in the market.

Why has there not been and will not be (at least for now) huge increases? Above all, cryptocurrency prices are also influenced by market expectations for the future. And in front of Merge, the market was red-hot – expectations were enormous. With such moods, it is very easy to get disappointed and cause declines.

Additionally, it is worth noting that the macroeconomic sentiment is not conducive to growth. Raging inflation and rising interest rates are reflected in on risky assets, and this group includes cryptocurrencies.

Moreover, we observe an increased interest of politicians in regulations. Both the United States and the European Union are working on introducing cryptocurrency laws. And regulations have already been introduced by many countries, including South Korea, India, China.

Technical Market Outlook:

The ETH/USD pair had broken out from the consolidation zone and made a new local high at the level of $1,593 (at the time of writing the article). The Ethereum rally made so far over $254 (19%), so the breakout is strong and might extend even higher. The momentum on the H4 time frame chart had hit the extremely overbought market conditions, so the pull-back is imminent. The nearest technical support is seen at $1,473 and $1,513. The next target for bulls is seen at $1,645.


Weekly Pivot Points:

WR3 – $1,413

WR2 – $1,379

WR1 – $1,357

Weekly Pivot – $1,345

WS1 – $1,323

WS2 – $1,311

WS3 – $1,267

Trading Outlook:

The Ethereum market has been seen making lower highs and lower low since the swing high was made in the middle of the August at the level of $2,029. The key technical support for bulls is seen at $1,281 as a part of the demand zone located between the levels of $1,252 – $1,295. If the down move will be extended, then the next target for bears is located at the level of $1,000.

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