ETH Bulls Need to Avoid Sub-$1,260 to Map a Return to $1,300

Key Insights:

• It was a bullish session for bitcoin (BTC) and ethereum (ETH) on Friday, with BTC revisiting $17,000.
• US economic indicators drove demand for the NASDAQ Index and the broader crypto market.
• However, the bullish sentiment failed to continue this morning as investors took stock of the latest stats and the latest shift in Fed sentiment.

Ethereum (ETH) rose by 1.44% on Friday. Reversing a 0.40% fall from Thursday, ETH ended the day at $1,269.

After a mixed start to the day, ETH fell to an early afternoon low of $1,234. ETH fell through the First Major Support Level (S1) at $1,241 before rallying to an early evening high of $1,277. ETH broke through the First Major Resistance Level (R1) at $1,261 and briefly through the Second Major Resistance Level (R2) at $1,270 before ending the day at $1,269.

On Friday, bitcoin (BTC) rose by 0.75%. Reversing a 0.13% loss from Thursday, BTC ended the day at $16,968. BTC revisited $17,000 for the second time in three sessions while avoiding sub-$16,500.

After a bearish morning, BTC fell to an early afternoon low of $16,687. BTC fell through the First Major Support Level (S1) at $16,782 and the Second Major Support Level (S2) at $16,722.

However, finding afternoon support, BTC rallied to a late high of $17,200. BTC broke through the Major Resistance Levels before a pullback through the Third Major Resistance Level (R3) at $17,061 to end the day at $16,968.

Less Hawkish Fed Bets and the NASDAQ Index Delivered a Bullish Session

US economic indicators drove demand for riskier assets on Friday. The December jobs report and ISM Non-Manufacturing PMI eased bets of a 50-basis point Fed rate hike in February.

In December, nonfarm payrolls increased by 223k versus 256k in November, while wages grew at a slower pace of 0.3% versus 0.4% in November. While the US unemployment rate fell from 3.6% to 3.5%, the participation rate rose from 62.2% to 62.3%.

The ISM Non-Manufacturing PMI fell from 56.5 to 49.6, with the Employment index declining from 51.5 to 49.8. Also market friendly was a fall in the Prices index from 70.0 to 67.6.

The probability of a 25-basis point Fed rate hike jumped from 58.1% to 75.7% on Friday, according to the FedWatchTool, supporting riskier assets. The NASDAQ Index and S&P 500 saw gains of 2.56% and 2.28%, respectively.

FOMC Member Bostic reportedly insinuated a 25-basis point rate hike in February, supporting market sentiment toward Fed monetary policy.

Today, there are no stats to provide direction, leaving BTC and ETH in the hands of the crypto news wires and Fed policy expectations. While easing bets of a 50-basis point Fed rate hike is positive, fears of a US economic recession and crypto regulatory risk remain headwinds.

Ethereum (ETH) Price Action

At the time of writing, ETH was down by 0.28% to $1,265. A mixed start to the day saw ETH rise to an early high of $1,271 before falling to a low of $1,262.

Technical Indicators

ETH must avoid the $1,260 pivot to target the First Major Resistance Level (R1) at $1,286. A move through the Friday high of $1,277 would signal a bullish session, though the crypto news wires would have to be crypto-friendly.

In the event of an extended rally, ETH would likely break through the Second Major Resistance Level (R2) at $1,303. The Third Major Resistance Level (R3) sits at $1,346.

A fall through the pivot ($1,260) would bring the First Major Support Level (S1) at $1,243 into play. However, barring an event-driven sell-off, ETH should avoid the Second Major Support Level (S2) at $1,217. The Third Major Support Level (S3) sits at $1,174.

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 $1,235. Following Friday’s bullish cross, the 50-day EMA pulled away from the 200-day EMA, with the 100-day EMA narrowing to the 200-day EMA, delivering bullish signals.

An ETH hold above S1 ($1,243) and the 50-day EMA ($1,235) would support a move through R1 ($1,286) to target R2 ($1,303). However, a fall through S1 ($1,243) would give the bears a run at the 50-day ($1,235). A fall through the 50-day EMA ($1,226) would send a bearish signal.

Bitcoin (BTC) Price Action

At the time of writing, BTC was down 0.09% to $16,953. A range-bound start to the day saw BTC rise to an early high of $16,990 before falling to a low of $16,935.

Technical Indicators

BTC needs to avoid a fall through the $16,952 pivot to target the First Major Resistance Level (R1) at $17,216. A return to $17,000 would signal a bullish session. However, the crypto news wires should be market-friendly to support a breakout.

In the event of an extended rally, BTC would likely test the Second Major Resistance Level (R2) at $17,465 and resistance at $17,500. The Third Major Resistance Level (R3) sits at $17,978.

A fall through the pivot would bring the First Major Support Level (S1) at $16,703 into play. Barring a crypto risk-off-fueled sell-off, BTC should avoid sub-$16,500 and the Second Major Support Level (S2) at $16,439. The Third Major Support Level (S3) sits at $15.926.

An adverse crypto market event would bring sub-$16,000 into play.

Looking at the EMAs and the 4-hourly candlestick chart (below), it was a more bullish signal. BTC sat above the 200-day EMA, currently at $16,917. The 50-day EMA converged on the 100-day EMA, with the 100-day EMA narrowing to the 200-day EMA, delivering bullish signals.

A bullish cross of the 50-day EMA through the 100-day EMA would support a run at R1 ($17,216). However, a fall through the 200-day EMA ($16,917) would give the bears a run at the 100-day ($16,800) and 50-day ($16,798) EMAs and S1 ($16,703). A fall through the 50-day EMA would be a bearish signal.