Bottom line: Ethereum long term structure continues to remain bullish against 89.50 mark. The crypto has rallied close to 342.00 recently and might attempt a test towards 363.00 resistance before producing a meaningful drop.
Fundamental Outlook:
USDCHF enters into its 11th day of consecutive slide as the exchange rate trades around 0.9070 levels. This is mainly attributed to a broad based US Dollar sell off through the entire month of July 2020. The US Dollar Index has dropped nearly 4.5% across major currencies over the entire month.
Major US Indices including the SPX500, Dow Jones and NASDAQ has rallied by over +5.3%, +2.26% and +7.25% respectively this month, adding pressure on the Greenback. As we enter into the last trading day of the month, it remains to be seen if the much awaited risk aversion returns.
US Q2 GDP contracted by over 32% amidst COVID-19 pandemic and lock downs. As Spain, Italy, Canada GDP are also expected to contract, the Global Economic picture remains gloomy and the recovery isn’t going to be a V or a W shaped.
The risk of a potential second wave of COVID-19 infections remain extremely high. Japan and Australia also join the list with US, India, Brazil and South Africa, where infections are on the rise. How long will risk assets continue to rally on hopes of existing and further stimulus packages?
Technical Analysis:
Ethereum bulls continue to remain in control pushing towards 342.00 levels. Believe it or not, a major corrective wave might be due towards 185.00 mark. It could resume either from current levels or after testing 363.00 resistance, going forward.
Ethereum has produced a religious rally from 89.50 lows in March 2020, through 342.00 highs in July 2020. Please note that fibonacci 0.618 retracement of the above rally is seen towards 185.00 levels. Probability remain high for prices to correct until 185.00 levels, before the next leg higher resumes.
Traders might be preparing to buy at a lower price after the corrective drop is complete. Aggressive traders might initiate fresh short positions with protective stop above 365.00 and projected targets around 200.00.
Prepared by
Harsh Japee, Technical Analyst.
Ethereum Chart
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