ETH Fails to Make a Move ahead of Testnet Launch with Powell in Focus

Key Insights:

• It was a bullish Tuesday for bitcoin (BTC) and ethereum (ETH), with BTC returning to $23,000.
• US economic indicators eased Fed Chair Powell press conference fears, supporting the NASDAQ Index and the broader crypto market.
• However, ETH and BTC struggled this morning, with Fed Chair Powell in the spotlight.

Ethereum (ETH) rose by 1.21% on Tuesday. Partially reversing a 4.80% slide from Monday, ETH ended the month up 32.64% to $1,585.

A mixed start to the day saw ETH fall to a mid-morning low of $1,561. Steering clear of the First Major Support Level (S1) at $1,518, ETH rallied to a late afternoon high of $1,605. Falling short of the First Major Resistance Level (R1) at $1,631, ETH eased back to end the day at sub-$1,600.

On Tuesday, bitcoin (BTC) rose by 1.34%. Partially reversing a 3.86% slide from Monday, BTC ended the month up 39.67% to $23,135. BTC had its best month since October 2021.

A mixed start to the day saw BTC slip to an early low of $22,730. Steering clear of the First Major Support Level (S1) at $22,292, BTC rallied to a late high of $23,297. Coming up short of the First Major Resistance Level (R1) at $23,577, BTC eased back to end the session at $23,135.

US Economic Indicators Provided Brief Relief Ahead of the Fed

On Tuesday, US economic indicators provided the NASDAQ Index and the broader crypto market with support.

The Employment Cost Index rose by 1.0% in Q4, coming in softer than a Q3 1.2%, with employment wages rising by 1.0% versus 1.3% in Q3. Inflation indicators had more influence than a fall in consumer confidence in the New Year. The CB Consumer Confidence Index fell from 109.0 to 107.1.

In response, the NASDAQ Index rose by 1.67% to deliver the best January return since 2001.

Ethereum Shanghai hard fork news failed to provide support, with investors waiting to see if there are any delays to the March event.

News of the rollout of the first public withdrawals testnet launching today at 1500 UTC failed to deliver support. Ethereum Foundation developer Parithosh shared the news on Twitter, saying,

“The Shanghai+Capella upgrade is going full steam ahead! The first public withdrawals testnet is launching 1st of Feb at 15 UTC.”

Parithosh also shared a link for interested parties to access more details about the launch.

For the day ahead, while Shanghai hard fork news remains influential, the Fed will likely have the final say. Later today, the Fed will deliver its first interest rate decision of the year. With the markets betting on a 25-basis point interest rate hike, Fed Chair Powell will be the focal point. A hawkish forward guidance would weigh on the NASDAQ Index and the broader crypto market.

Ahead of the policy decision and press conference, US economic indicators will also draw interest. ADP nonfarm employment change, JOLTs job openings, and the ISM Manufacturing PMI will be in focus. Positive labor market numbers would support a hawkish policy outlook.

Ethereum (ETH) Price Action

At the time of writing, ETH was down 0.52% to $1,577. A mixed start to the day saw ETH rise to an early high of $1,593 before falling to a low of $1,576.

Technical Indicators

ETH needs to move through the $1,584 pivot to target the First Major Resistance Level (R1) at $1,606. A return to $1,600 would signal a breakout session. However, Fed Chair Powell and Shanghai hard fork updates will have to be ETH-friendly to support a breakout.

In the event of an extended rally, the bulls would likely test the Second Major Resistance Level (R2) at $1,628 and resistance at $1,650. The Third Major Resistance Level (R3) sits at $1,672.

Failure to move through the pivot would leave the First Major Support Level (S1) at $1,562 in play. However, barring a broad-based crypto market sell-off, ETH should avoid sub-$1,500. The Second Major Support Level (S2) at $1,540 should limit the downside. The Third Major Support Level (S3) sits at $1,496.

Looking at the EMAs and the 4-hourly candlestick chart (below), it was a bullish signal. Ethereum sat above the 100-day EMA, currently at $1,559. The 50-day EMA flattened on the 100-day EMA, while the 100-day EMA widened from the 200-day EMA, delivering bullish signals.

A move through the 50-day EMA ($1,580) would support a breakout from R1 ($1,606) to target R2 ($1,628) and $1,650. However, a fall through S1 ($1,562) and  the 100-day EMA ($1,559) would give the bears a run at S2 ($1,540) . A move through the 50-day EMA would send a bullish signal.

Bitcoin (BTC) Price Action

At the time of writing, BTC was down 0.20% to $23,088. A mixed start to the day saw BTC fall to an early low of $23,009 before rising to a high of $23,179.

Technical Indicators

BTC needs to avoid a fall through the $23,054 pivot to target the First Major Resistance Level (R1) at $23,378. A move through the Tuesday high of $23,297 would signal another bullish session. However, Fed Chair Powell and the NASDAQ Index need to provide support.

In the event of another bullish session, the bulls would likely test the Second Major Resistance Level (R2) at $23,621 and resistance at $24,000. The Third Major Resistance Level sits at $24,188.

A fall through the pivot would bring the First Major Support Level (S1) at $22,811 into play. However, barring a Fed-fueled crypto sell-off, BTC should avoid sub-$22,500 and the Second Major Support Level (S2) at $22,487. The Third Major Support Level (S3) sits at $21,920.

Looking at the EMAs and the 4-hourly candlestick chart (below), it was a bullish signal. BTC sat above the 50-day EMA, currently at $22,915. 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 ($22,915) would support a breakout from R1 ($23,378) to target R2 ($23,621) and $24,000. However, a fall through the 50-day EMA ($22,915) would support a fall through S1 ($22,811) to give the bears a run at S2 ($22,487). A fall through the 50-day EMA would send a bearish signal.