Bottom line: Ethereum long term structure remains bullish against 89.50 lows in March 2020. After having print 488.00 early this month, the crypto might be looking to carve a meaningful corrective drop towards 240.00/250.00 levels.
Fundamental Outlook:
USDCHF is holding above its 0.9000 lows carved earl this month. The exchange rate is trading close to 0.9080/85 levels as we prepare to publish and is expected to remain well bid over the next several weeks. The US Dollar Index (DXY) might be indicating further strength as it holds above 91.75 mark. Further, a return in risk aversion might only add to the US Dollar strength.
GBPJPY has dropped over 800 pips since 142.72 highs on September 01, 2020. The exchange rate had dropped through 134.50 yesterday before finding some bids. The Bank of England has keep rate decision unchanged to 0.1% and might be thinking to implement a negative interest rate policy.
The dovish stance by BoE, possibility of a hard or No-Brexit deal and fears of a second wave of COVID-19 infections might keep the exchange rate under pressure. GBPUSD had also dropped from its 1.3483 highs early this month to 1.2760 lows before finding some bids.
Technical Analysis:
Ethereum remains in control of bears since hitting 488.00 mark on September 01, 2020. After dropping sharply towards 310.00 levels, it has found interim support and produced a potential counter trend rally towards 394.00 levels. Bears might be preparing to resume lower towards 240.00/250.00 mark in the next several weeks.
Ethereum had managed to produce a religious uptrend after printing lows around 89.50 levels in March 2020. The rally could be classified as an impulse wave (consists of 5 sub-waves following certain guidelines). Also as discussed earlier, an impulse wave is ideally followed by a corrective wave towards the opposite direction.
Ethereum might be unfolding a meaningful corrective drop since 488.00 highs. The recent drop between 488.00 and 310.00 is being retraced and could reach up to 422.00, which is fibonacci 0.618 levels of the above drop. Bears might resume lower thereafter.
Also note that 240.00/250.00 zone is seen as fibonacci 0.618 retracement of the entire rally between 89.50 and 488.00 respectively. High probability remains for a bullish bounce if prices manage to reach there. Most traders might be preparing to initiate fresh longs in that region.
Prepared by
Harsh Japee, Technical Analyst.
Ethereum Chart
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