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Ethereum tests the short-term trend line resistance
Ethereum, ranking second in cryptocurrency market capitalization, has shown impressive growth this year. Its recent performance suggests a successful year-end. Investors are hopeful yet cautious, debating whether the trend will continue or if it's time to exit the market.
Profitability Among Ethereum Holders
Recent data indicate that three-quarters of Ethereum holders have profited recently. Specifically, 76% have gained from Ethereum's value increase, while 23% are at a loss. Only a small fraction, about 1%, bought Ethereum at its current price. This scenario suggests a possible increase in sell-offs as more holders seek to capitalize on their gains.
Influence of Holder Distribution on Market Dynamics
The distribution of Ethereum holdings is noteworthy. A mere 46% of Ethereum tokens are held by addresses owning at least 0.1% of the total supply. This indicates a lower risk of massive, coordinated sell-offs due to the limited concentration of large holders. However, significant transactions by these 'whale' holders can still profoundly impact the market.
Federal Reserve's Interest Rate Policy and Its Impact
The Federal Reserve's recent decision to maintain interest rates, with plans for reductions in 2024, may influence Ethereum and other major cryptocurrencies. While some market watchers are optimistic about this development, others remain skeptical, preferring tangible actions over future promises.
Technical Market Outlook:
The ETH/USDT pair had bounced from the key demand zone on the H4 time frame chart located between the levels of $2,137 - $2,125. The Hammer candlestick pattern at the end of the down swing allowed the bulls to bounce 6.45% already and test the short-term trend line resistance located around the level of $2,244. The intraday technical resistance is located at the level of $2,254, which is the next target for bulls in a case of a breakout.
The momentum indicator on the H4 time frame chart is now positive and strong which supports the short-term bullish outlook for ETH. Only a sustained breakout below the last swing low seen at $2,166 would change the outlook to bearish.
Weekly Pivot Points:
Pivot Points are key price levels used in technical analysis to identify potential trend reversals, support, and resistance levels in financial markets.
WR3 - $2,911
WR2 - $2,553
WR1 - $2,349
Weekly Pivot - $2,196
WS1 - $1,992
WS2 - $1,838
WS3 - $1,481
Trading Outlook:
The Ethereum market has been seen moving up since the low was made at the level of $1,520. The long-term crucial technical support at $1,368 holds significance, and as long as the market maintains trades above this level, the overall outlook remains bullish. The key mid-term technical support is located at the level of $1,913 and only a sustained breakout below this level would change to long-term outlook to more bearish.
Practical Trading Insights:
- Monitor Ethereum's Market Movements: Keep an eye on Ethereum's price and market trends for informed trading decisions.
- Consider Holder Distribution Impact: Stay aware of the potential influence of large Ethereum holders on market dynamics.
- Stay Updated on Economic Policies: Federal Reserve decisions and global economic trends can significantly affect cryptocurrency markets.
- Be Prepared for Market Volatility: Given the fluctuating nature of cryptocurrencies, maintain a strategy that accommodates sudden market changes.
Useful Links
Important Reminder
The begginers in forex trading need to be very careful when making decisions about entering the market. Before the release of important reports, it is best to stay out of the market to avoid being caught in sharp market fluctuations due to increased volatility. If you decide to trade during the news release, then always place stop orders to minimize losses.
Without placing stop orders, you can very quickly lose your entire deposit, especially if you do not use money management and trade large volumes. For successful trading, you need to have a clear trading plan and stay focues and disciplined. Spontaneous trading decision based on the current market situation is an inherently losing strategy for a scalper or daytrader.