FX.co ★ Technical Analysis of ETH/USD for January 18, 2024

Is Ethereum Suppy In Decrease?

Analyzing Ethereum's Position in the Crypto Arena

Key Highlights:

• Ethereum's Rising Dominance: Ethereum is distinguishing itself with a 2% gain in value, marking a notable contrast to Bitcoin's 15% decline. This trend signifies Ethereum's increasing dominance and resilience in the cryptocurrency market.
• Potential for an Ethereum ETF: The crypto community is eagerly anticipating the decision on an Ethereum Spot ETF in May. This potential development is a critical factor that could significantly influence Ethereum's market trajectory.
• Technical Outlook for ETH/USD: The ETH/USD pair shows a complex pattern, with a recent 10% correction and a Bearish Engulfing pattern suggesting caution. However, the formation of a potential Bullish Triangle pattern indicates the possibility of an upward price movement, making the current market situation a critical juncture for Ethereum.

Ethereum's Emerging Pattern: A Potential Turnaround?

Ethereum's dance with the crypto market is taking an interesting turn. A notable decrease in Ether's availability on exchanges hints at a potential shift. This decrease is now nearing a historic low, indicating a significant market movement for Ethereum.

Comparative Analysis: Ethereum and Bitcoin

Bitcoin's recent performance, particularly post-ETF approvals, has been a mixed bag, leading to some investor dissatisfaction. In contrast, Ethereum (ETH) has shown resilience, gaining nearly 2% in value. This places the price of Ethereum at just over USD 2,500, marking a distinct price advantage over Bitcoin.

Underlying Factors: Ethereum's Current Market Position

• Ethereum ETF Anticipation: The market is buzzing with the possibility of an Ethereum ETF, a decision expected in May. An ETF approval could significantly impact Ethereum's market value.
• Network Developments: Continuous advancements, like the Dencun hard fork, are set to enhance Ethereum's blockchain functionality.
• Deflationary Dynamics: Ethereum's switch to a Proof of Stake mechanism has introduced a deflationary aspect to its economy. The current supply of Ethereum stands at 120,173,895 ETH, with a negative supply growth of -0.21% annually. The chart below from Ultra Sound Money graphic illustrates how the ETH supply is decreasing.

Technical Outlook: ETH/USD Pair

The ETH/USD pair has made a -10% correction after the Bearish Engulfing candlestick pattern was created at the top of the recent move. The market declined sharply fro the level of $2,715 and is currently consolidatig around the technical support seen at the level of $2,498. The intraday technical resistance is located at the level of $2,614 and only a dynamic breakout above this level would change the outlook to more bullish. Please notice, there is a potential Bullish Triangle price pattern in progress on H4 time frame chart, which indicates a possibility of a breakout higher in the nearest future.

Intraday Indicators: A Mixed Signal

• Buy signals dominate 13 out of 23 technical indicators.
• Moving averages present a more bullish sentiment, with 13 out of 18 showing Buy signals.

Market Sentiment: Leaning Towards Bullishness

The general sentiment in the market is heavily bullish, with a significant lean towards optimism in recent days.

Pivot Points: Key Levels to Watch

• Upper resistance levels: WR3 - $2,631, WR2 - $2,568, WR1 - $2,545
• Pivot point: Weekly Pivot - $2,506
• Lower support levels: WS1 - $2,482, WS2 - $2,443, WS3 - $2,380

Technical Insights:

• Bearish Engulfing Pattern signals potential bearish control.
• The EMA and DEMA positions suggest a bearish crossover possibility.
• RSI at a neutral 51.51, indicating an absence of strong momentum.

Bullish Scenario:

• Recovery from the EMA could negate the bearish pattern.
• Stability or rise in RSI could signal growing bullish momentum.
• DEMA acting as a support level reinforces a bullish outlook.

Bearish Scenario:

• Continued decline post-Bearish Engulfing indicates bear strength.
• A drop below EMA confirms bearish momentum.
• RSI decline supports a bearish trend.

Trading Insights for Investors

Investors should consider the broader market sentiment and potential news affecting the crypto market. It's crucial to blend technical analysis with other analysis forms for a comprehensive view. Remember, the cryptocurrency market is volatile and unpredictable. Investors should remain informed and cautious.

Useful Links

• More Artcles
• InstaForex Course for Beginners
• Open Trading Account

Important Notice

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.

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