Ethereum (CRYPTO: ETH) initially held up well while Bitcoin (CRYPTO: BTC) took a downturn but after failing to surpass its Nov. 10 all-time high of $4,867.81 when the crypto made a run toward it on Dec. 1, Ethereum fell into a downtrend.
On Wednesday, the Federal Reserve released the minutes from its December meeting and although it will not hike interest rates until 2022, the Fed went ahead with plans to double its monthly taper pace to $30 billion from $15 billion.
The cryptocurrency market, as well as the general markets, reacted bullishly to the news, which indicates the Fed’s policy adjustment was already priced in.
Ethereum had already printed a bullish pattern on the daily chart in preparation for a possible reversal and could be in for a trend change if it can get the momentum to print a higher high on the daily chart.
See Also: As Bitcoin and Ethereum Rebound Ahead Of FOMC Decision, Here’s What 4 Analysts Are Saying
The Ethereum Chart: Ethereum entered into a downtrend on Dec. 1, making a fairly consistent series of lower highs and lower lows. The crypto’s most recent lower low fell at the $3,660 level on Dec. 13 and the most recent lower high was printed on Dec. 12 at $4,186.16.
On Wednesday, Ethereum dipped slightly below the Dec. 13 low-of-day but was close enough to the price that the crypto may have now printed a bullish double bottom pattern at the level. If the pattern is recognized, Ethereum should see higher prices over the coming days.
Ethereum was trading up on higher-than-average volume, which indicates a high level of investor interest has returned into the crypto. By late afternoon Ethereum’s volume was registering in at over 250,000 compared to the average 10-day volume of 208,907.
Ethereum is trading in line with the eight-day exponential moving average (EMA) but below the 21-day EMA, with the eight-day EMA trending below the 21-day, which leans bearish. The eight-day EMA is currently acting as a resistance level for the crypto and bullish traders will want to see Ethereum regain the level as support in the near term to feel confident going forward.
Want direct analysis? Find me in the BZ Pro lounge! Click here for a free trial.
- Bulls want to see sustained big bullish volume push Ethereum over the eight-day EMA and up toward a resistance level at $4,168.56, which could propel the crypto up to make a higher high and negate the downtrend. Above the level, there is further resistance at $4,384.32.
- Bears want to see Ethereum continue to reject the eight-day EMA and for big bearish volume to drop the crypto down below a support zone at $3,610.91, which would confirm the downtrend is still intact. Below the level, there is further support at $3,240.