FX.co ★ Technical Analysis of ETH/USD for December 27, 2022

Crypto Industry News:

Jair Bolsonaro, Brazil's president, who is due to leave office on December 31, has signed a bill to legalize the use of cryptocurrencies as a payment method in the country.

In a December 22 publication of the official journal of the Federal Government of Brazil, Bolsonaro's office reported that the president had signed Law 14,478 after being approved by the Chamber of Deputies. The Legislature sent the bill to the president's desk on November 29 as the final step to recognize crypto payments.

Under the bill, residents of Brazil will not be able to use cryptocurrencies such as Bitcoin as legal tender in the country, as is the case in El Salvador. However, the newly passed law includes many digital currencies as part of the definition of legal payment methods in Brazil. It also establishes a licensing system for virtual asset service providers and sets out penalties for fraud with digital assets.

Bolsonaro's announcement did not suggest which federal agency might be responsible for overseeing crypto payments. However, as in the United States, digital assets considered securities fall under the regulatory umbrella of the Brazilian Securities and Exchange Commission. The law also included provisions, likely introduced in response to FTX's demise, requiring exchanges to distinguish between user and company assets.

The cryptocurrency law will come into force in 180 days, probably in June 2023. Bolsonaro is expected to leave office in a few days, after which Luiz Inacio Lula da Silva will assume the presidency on January 1. Luiz was the president of Brazil from 2003 to 2010 and has previously spoken out in favor of cryptocurrency and blockchain adoption.

Technical Market Outlook:

The Ethereum cryptocurrency has retraced 38% of the last wave down on the H4 time frame chart and is currently trading close to this level, consolidating the recent gains. The 100 SMA is seen at the level of $1,246, so bulls need to break through this level in order to continue the bounce towards the technical resistance seen at $1,278. The intraday volatility is very limited. The key short-term technical support is seen at the level of $1,150. On the higher time frame, like weekly, there is a clear test of the 50 WMA located at the level of $1,080, so any breakout below the moving average and a weekly candle close below moving average will be considered as another indication of the down trend continuation.

Weekly Pivot Points:

WR3 - $1,258

WR2 - $1,240

WR1 - $1,230

Weekly Pivot - $1,221

WS1 - $1,212

WS2 - $1,201

WS3 - $1,184

Trading Outlook:

The Ethereum market has been seen making lower highs and lower low since the swing high was made in the middle of the August at the level of $2,029. The key technical support for bulls at $1,281 was broken already and the new yearly low was established at $1,074. If the down move will be extended, then the next target for bears is located at the level of $1,000.