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ETH and BTC Await the Fed, with a December Fed Pivot a Bullish Outcome

By:
Bob Mason
Updated: Nov 2, 2022, 12:21 UTC

ETH and BTC are on the back foot this morning as investors focus on the Fed. Expect the NASDAQ Composite Index to guide BTC and ETH late in the day.

ETH and BTC - technical analysis - FX Empire

Key Insights:

  • Bitcoin (BTC) and ethereum (ETH) had a mixed session on Tuesday, with ETH finding support while BTC ended the day flat.
  • US economic indicators tested investor sentiment ahead of today’s Fed policy decision and press conference.
  • However, the technical indicators remain bullish, signaling further gains.

Ethereum (ETH) rose by 0.32% on Tuesday. Partially reversing a 1.13% fall from Monday, ETH ended the day at $1,578.

A bullish morning saw ETH rise to a late-morning high of $1,613. Falling short of the First Major Resistance Level (R1) at $1,624, ETH fell to an early afternoon low of $1,563. Steering clear of the First Major Support Level (S1) at $1,534, ETH revisited $1,586 before easing back to sub-$1,580.

On Tuesday, bitcoin (BTC) slipped by 0.04%. Following a 0.67% loss on Monday, BTC ended the day at $20,500. Notably, BTC wrapped up the day at $20,000 for the eighth consecutive session while avoiding sub-$20,000 for the seventh day in a row.

A bullish start to the day saw BTC rise to a late-morning high of $20,699. Falling short of the First Major Resistance Level (R1) at $20,827, BTC fell to an early afternoon low of $20,340. However, steering clear of the First Major Support Level (S1) at $20,224, BTC revisited $20,528 before falling back into the red.

US economic indicators weighed on BTC, ETH, and the broader crypto market. Better-than-expected US labor market stats reignited fears of consecutive 75-basis point Fed rate hikes in November and December.

Later today, ADP nonfarm employment change figures from the US could add fuel to the fire. Following the Q3 GDP numbers and a pickup in inflationary pressure, another hot ADP number could force the Fed to deliver a more hawkish outlook that would weigh on the NASDAQ Composite Index and the crypto market.

Today, the NASDAQ 100 mini was up 24.5 points, providing BTC and ETH modest morning support.

With less than nine hours remaining until the Fed decision, the FedWatch Tool had the probability of November and December rate hikes at 87.5% and 50.3%, respectively. One week ago, the likelihood of a 75-basis point hike in December stood at 35.6%.

NASDAQ Correlation.
NASDAQ BTC ETH Correlation – 021122 Daily Chart

Ethereum (ETH) Price Action

At the time of writing, ETH was down 0.88% to $1,564. A mixed morning saw ETH rise to an early high of $1,601 before falling to a low of $1,554.

The First Major Support Level (S1) at $1,556 provided early ETH support.

ETH on the defensive.
ETHUSD 021122 Daily Chart

Technical Indicators

ETH needs to move through the $1,585 pivot to retarget the First Major Resistance Level (R1) at $1,606 and the Tuesday high of $1,613. An ETH return to $1,600 would signal a bullish afternoon session. However, moves through the US session will be data and Fed-dependent.

In the event of an extended rally, the Second Major Resistance Level (R2) at $1,635 and $1,650 would likely come into play. The Third Major Resistance Level (R3) sits at $1,685.

Failure to move through the pivot would leave the First Major Support Level (S1) at $1,556 in play. However, barring a Fed-fueled sell-off, ETH should avoid sub-$1,500. The Second Major Support Level (S2) at $1,535 should limit the downside.

The Third Major Support Level (S3) sits at $1,485.

ETH support levels in play below the pivot.
ETHUSD 021122 Hourly Chart

Looking at the EMAs and the 4-hourly candlestick chart (below), it was a bullish signal. Ethereum sat above the 50-day EMA, currently at $1,538. The 50-day EMA pulled away from the 100-day EMA, with the 100-day EMA widening from the 200-day EMA, delivering bullish signals.

A hold above the 50-day EMA would support a breakout from R1 ($1,606) to target R2 ($1,635) and $1,650. However, a fall through S1 ($1,556) would bring the 50-day EMA ($1,538) and S2 ($1,535) into view.

EMAs bullish.
ETHUSD 021122 4 Hourly Chart

Bitcoin (BTC) Price Action

At the time of writing, BTC was down 0.04% to $20,491. A mixed morning saw BTC rise to an early high of $20,574 before falling to a low of $20,371.

BTC holds steady.
BTCUSD 021122 Daily Chart

Technical Indicators

BTC needs to move through the $20,513 pivot to target the First Major Resistance Level (R1) at $20,686 and the Tuesday high of $20,699. A BTC return to $20,600 would signal a possible breakout session.

In the case of an extended rally, the Second Major Resistance Level (R2) at $21,872 and $21,000 would likely come into play. The Third Major Resistance Level (R3) sits at $21,231. BTC movement will hinge on US economic indicators and the FED.

Failure to move through the pivot would leave the First Major Support Level (S1) at $20,327 in play. Barring an extended sell-off, BTC should avoid sub-$20,000. The Second Major Support Level (S2) at $20,154 would limit the downside. However, a hawkish Fed would bring sub-$20,000 into view.

The Third Major Support Level (S3) sits at $19,795.

BTC support levels in play below the pivot.
BTCUSD 021122 Hourly Chart

Looking at the EMAs and the 4-hourly candlestick chart (below), it was a bullish signal. This morning, bitcoin sat above the 50-day EMA, currently at $20,379. The 50-day EMA widened from the 200-day EMA, with the 100-day EMA moving away from the 200-day EMA to deliver bullish signals.

A hold above the 50-day EMA ($20,379) would support further upside and a return to $21,000. However, a fall through the 50-day EMA would bring the 100-day EMA ($20,089) and sub-$20,000 into view. The 200-day EMA sits at $19,905.

EMAs bullish.
BTCUSD 021122 4 Hourly Chart

About the Author

Bob Masonauthor

With over 20 years of experience in the finance industry, Bob has been managing regional teams across Europe and Asia and focusing on analytics across both corporate and financial institutions. Currently he is covering developments relating to the financial markets, including currencies, commodities, alternative asset classes, and global equities.

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