ETH Bulls to Target $1,400 on Softer Inflation and Dovish Fed Chatter

Key Insights:

• Bitcoin (BTC) and ethereum (ETH) joined the broader crypto market in another bullish crypto session on Wednesday.
• Easing FTX contagion risk, reports of China planning to ease COVID-19 restrictions, and Fed Chair Powell delivered a breakout session.
• However, it has been a mixed morning session, with investor focus shifting to the US economic calendar.

Ethereum (ETH) rallied by 6.50% on Wednesday. Following a 4.20% gain on Tuesday, ETH ended the day at $1,295. ETH visited $1,300 for the first time since November 11.

A bullish start to the day saw ETH rally from an early low of $1,1212 to a late high of $1,312. ETH broke through the First Major Resistance Level (R1) at $1,1243 and the Second Major Resistance Level (R2) at $1,270 to end the day at $1,295.

On Wednesday, bitcoin (BTC) rallied 4.42%. Following a 1.48% gain on Tuesday, BTC ended the day at $17,180. Notably, BTC wrapped up the day at $17,000 for the first time since early November.

A mixed start to the day saw BTC fall to an early low of $16,446. Steering clear of the First Major Support Level (S1) at $16,187, BTC surged to a late high of $17,275. BTC broke through the First Major Resistance Level (R1) at $16,631 and the Second Major Resistance Level (R2) at $16,810. The Third Major Resistance Level (R3) at $17,254 capped the upside.

Reports of the Chinese government planning to ease COVID-19 lockdown measures delivered early support. However, Fed Chair Powell fueled demand for riskier assets late in the Wednesday session.

Powell talked of slowing the pace of interest rate hikes, supporting the bets of a December Fed pivot. The NASDAQ Composite Index rallied by 4.41%, with the S&P500 gaining 3.09%.

After briefly decoupling, BTC and ETH tracked the NASDAQ Composite Index through the US session.

Later today, the US economic calendar will be back in focus, with inflation and personal spending due. A spike in US inflation could unravel Powell’s plans to take the foot off the gas. With US stats in focus, FOMC member chatter will also need monitoring.

The NASDAQ mini was down 39.25 points this morning, with BTC and ETH also in consolidation mode.

Ethereum (ETH) Price Action

At the time of writing, ETH was down 1.09% to $1,281. A bearish morning saw ETH fall from an early high of $1,296 to a low of $1,276.

Technical Indicators

ETH has to avoid a fall through the $1,1273 pivot to target the First Major Resistance Level (R1) at $1,334. Softer US inflation numbers and dovish FOMC member chatter would support a breakout from the Wednesday high of $1,312.

In the event of an extended rally, the Second Major Resistance Level (R2) at $1,363 and $1,400 would likely come into play. The Third Major Resistance Level (R2) sits at $1,473.

A fall through the pivot would bring the First Major Support Level (S1) at $1,234 into play. However, barring an extended afternoon sell-off, ETH should avoid sub-$1,200 and the Second Major Support Level (S2) at $1,173.

The Third Major Support Level (S3) sits at $1,073.

Looking at the EMAs and the 4-hourly candlestick chart (below), it was a more bullish signal. Ethereum sat above the 200-day EMA, currently at $1,277. The 50-day EMA closed in on the 100-day EMA, with the 100-day EMA narrowing to the 200-day EMA, delivering bullish signals.

A hold above the 200-day EMA ($1,277) would support a breakout from R1 ($1,334) to target R2 ($1,373) and $1,400. However, a fall through the 200-day EMA would give the bears a run at S1 ($1,234) and the 100-day ($1,230).

Bitcoin (BTC) Price Action

At the time of writing, BTC was down 0.47% to $17,100. A mixed morning saw BTC rise to an early high of $17,271 before falling to a low of $17,072.

Technical Indicators

BTC needs to avoid the $16,967 pivot to target the First Major Resistance Level (R1) at $17,488. A move through the Wednesday high of $17,275 would signal an extended breakout session. However, BTC would need US stats, FOMC member commentary, and friendly FTX-linked news updates to support a run at $18,000.

In the event of an extended rally, BTC would likely test the Second Major Resistance Level (R2) at $17,796 and resistance at $18,000 before any pullback.

The Third Major Resistance Level (R3) sits at $18,625.

A fall through the pivot would bring the First Major Support Level (S1) at $16,659 into play. Barring an extended sell-off, BTC should avoid sub-$16,500 and the Second Major Support Level (S2) at $16,138. The Third Major Support Level (S3) sits at $15,309.

Looking at the EMAs and the 4-hourly candlestick chart (below), it was a more bullish signal. This morning, bitcoin sat above the 100-day EMA, currently at $16,834. The 50-day EMA closed in on the 100-day EMA, with the 100-day EMA narrowing to the 200-day EMA, delivering bullish signals.

A move through R1 ($17,488) and the 200-day EMA ($17,510) would support a breakout from R2 ($17,796) to target $18,000. However, a fall through the 100-day EMA ($16,824) would bring S1 ($16,659) and the 50-day EMA ($16,631) into view.