FX.co ★ Technical Analysis of ETH/USD for May 19, 2022

Crypto Industry News:

The Dutch regulator said the cryptocurrency derivatives market should be limited to wholesale trading. The reasons are not alien - lack of transparency, market manipulation and "other forms of criminal activity".

The head of the Department of Capital Markets and Transparency Supervision at the Dutch Financial Markets Authority (AFM), Paul-Willem van Gerwen, shared his opinion on trading cryptocurrency derivatives during the Amsterdam Propriety Traders Managers Meeting.

Van Gerwen stressed that despite (or perhaps because of) the market's growing interest in trading cryptocurrency derivatives, AFM believes that "such trading comes with risk" and considers the market to be less mature than other derivatives markets. According to van Gerwen, the specific problem of volatility in crypto products raises the question of whether "the parties to a derivative transaction will be able to deliver on their promises."

Consequently, AFM believes that cryptocurrency derivative operations should be limited to wholesale trading. The official admitted that, unlike UK counterparts from the Financial Conduct Authority (FCA), the AFM did not ban such trading, but suggested it could certainly do so.

The speaker encouraged participants to take part in the pilot tDLT cases managed by the Dutch financial authorities in the Sandbox environment.

Technical Market Outlook:

The recent up move on the ETH/USD market might have been terminated at the level of $2,163 as the Shooting Star candlestick pattern was made at the end of the bounce from $1,700. The nearest technical resistance is seen at $2,199, but the weak and negative momentum supports the short-term bearish outlook with a new target for bears seen at the level of $1,420. The market keeps making lower lows and lower highs on the H4 time frame chart, so the down trend is intact. Currently the bears are testing the range lower levels around $1,887. In a case of a breakout lower, the Swing low in nest up for a test.

Weekly Pivot Points:

WR3 - $3,385

WR2 - $2,946

WR1 - $2,555

Weekly Pivot - $2,120

WS1 - $1,688

WS2 - $1,275

WS3 - $820

Trading Outlook:

The down trend on the H4, Daily and Weekly time frames had broken below the key long term technical support seen at the level of $2,000 and continues to make new lower lows with no problems whatsoever. So far every bounce and attempt to rally is being used to sell Ethereum for a better price by the market participants, so the bearish pressure is still high. The next target for bears is located at the level of $1,420.