ETH and a Return to $1,300 Sits in the Hands of US Wholesale Inflation

Key Insights:

• On Thursday, bitcoin (BTC) and ethereum (ETH) joined the broader crypto market in positive territory.
• US economic indicators supported the market bets of a December Fed pivot, driving demand for riskier assets.
• However, with US wholesale inflation and consumer sentiment in focus today, investors were in wait-and-see mode this morning.

Ethereum (ETH) rallied by 3.90% on Thursday. Reversing a 3.07% slide from Wednesday, ETH ended the day at $1,280. Despite the bullish session, ETH fell short of $1,300 for a third consecutive day.

A bearish start to the day saw ETH fall to an early low of $1,222. Steering clear of the First Major Support Level (S1) at $1,205, ETH rallied to a late afternoon high of $1,293. ETH broke through the First Major Resistance Level (R1) at $1,268 to end the day at $1,280.

On Thursday, bitcoin (BTC) rallied by 2.37%. Reversing a 1.45% decline from Wednesday, BTC ended the day at $17,246. Notably, BTC ended the day at $17,000 for the fifth time in nine sessions, supporting calls of a bottoming out.

A range-bound morning saw BTC fall to a morning low of $16,756. However, steering clear of the First Major Support Level (S1) at $16,646, BTC rallied to a late high of $17,323. BTC broke through the First Major Resistance Level (R1) at $17,101 to end the day at $17,246.

Fed Pivot Bets Trumped Global Economic Recession Fears

The usually innocuous US jobless claims delivered riskier assets with much-needed support on Thursday. Following last week’s jobs report, investors found relief from a modest increase in the weekly jobless claims, easing fears of another 75-basis point Fed rate hike.

The NASDAQ Composite Index rose by 1.13%, muting investor fears of a global economic recession.

However, investors have several US economic indicators to navigate before the Wednesday Fed policy decision. Today, wholesale inflation and consumer sentiment figures will draw interest. An unexpected pickup in wholesale inflation would be NASDAQ and crypto market negative.

Economists have forecast the wholesale annual inflation rate to soften from 8.0% to 7.2%. In-line-with or softer numbers should deliver crypto support. We also expect market sensitivity to the Michigan consumer sentiment numbers. While the headline figure will influence, investors should consider the sub-components, including inflation expectations.

The NASDAQ mini was up 64 points this morning, providing early crypto market support. However, price action this morning reflected investor caution ahead of today’s stats.

Ethereum (ETH) Price Action

At the time of writing, ETH was up 0.23% to $1,283. A mixed morning saw ETH fall to an early low of $1,273 before rising to a high of $1,289.

Technical Indicators

ETH needs to avoid the $1,265 pivot to target the First Major Resistance Level (R1) at $1,308 and the Monday high of $1,306. A return to $1,300 would signal a bullish afternoon session.

In the event of an extended rally, the bulls would likely take a run at the Second Major Resistance level (R2) at $1,336 and $1,350. The Third Major Resistance Level (R2) sits at $1,407.

A fall through the pivot would bring the First Major Support Level (S1) at $1,237 into play. However, barring a US inflation-fueled sell-off, ETH should avoid sub-$1,220 and the Second Major Support Level (S2) at $1,194. The Third Major Support Level (S3) sits at $1,123.

Looking at the EMAs and the 4-hourly candlestick chart (below), it was a bullish signal. Ethereum sat above the 200-day EMA, currently at $1,272. The 50-day EMA closed in on the 200-day EMA, with the 100-day EMA narrowing to the 200-day EMA, delivering bullish signals.

A hold above the 200-day EMA ($1,272) would support a breakout from R1 (1,308) to bring R2 ($1,336) and $1,350 into play. However, a fall through the 50-day ($1,254) and the 100-day ($1,250) EMAs would bring S1 ($1,237) into view.

Bitcoin (BTC) Price Action

At the time of writing, BTC was up 0.03% to $17,251. A mixed morning saw BTC fall to an early low of $17,213 before rising to a high of $17,314.

Technical Indicators

BTC needs to avoid the $17,108 pivot to target the First Major Resistance Level (R1) at $17,461 and test resistance at $17,500. A move through the Thursday high of $17,323 would signal a bullish session.

In the event of an extended rally, BTC would likely test the Second Major Resistance Level (R2) at $17,675. The Third Major Resistance Level (R3) sits at $18,242.

A fall through the pivot would bring the First Major Support Level (S1) at $16,894 into play. Barring an extended sell-off, BTC should avoid sub-$16,750 and the Second Major Support Level (S2) at $16,541. The Third Major Support Level (S3) sits at $15,974.

Soft US wholesale inflation figures and a pickup in consumer sentiment should deliver a bullish afternoon session.

Looking at the EMAs and the 4-hourly candlestick chart (below), it was a bullish signal. This morning, bitcoin sat below the 200-day EMA, currently at $17,322. The 50-day EMA crossed through the 100-day EMA, with the 100-day EMA narrowing to the 200-day EMA, delivering bullish signals.

A move through the 200-day ($17,322) and R1 ($17,461) would give the bulls a run at R2 ($17,675) and $18,000. However, a fall through the 50-day EMA ($16,955) and the 100-day EMA ($16,941) would bring S1 ($16,894) and sub-$16,750 into view.