Technical Analysis

ETH/USD Analysis – January 7, 2022

By LonghornFX Technical Analysis
Jan 7, 20224 min

Daily Price Outlook

The ETH/USD closed at $3407.21 after reaching a high of $3550.42 and a low of $3306.91. ETH/USD dropped further on Thursday and reached its lowest level since October 2021 amid the prevailing negative market mood. Big cryptos like Ethereum and Bitcoin suffered on Thursday after the US Federal Reserve released its December policy minutes, which revealed that the Fed has decided to raise interest rates sooner than earlier expected to mitigate the effects of high inflation.

Cryptocurrencies have been gaining much attention lately amid the rising inflation all over the globe. It has even pushed El Salvador to make bitcoin its legal tender. However, the news that the central bank of the leading economy in the world will take steps to control rising inflation sooner than anticipated had a negative impression on cryptocurrencies like BTC and ETH.

On the other hand, most countries were looking for ways to regulate the whole crypto industry as it posed a threat to fiat currencies and the risks associated with the industry. Moreover, the increasing rate of cybercrimes involving cryptocurrencies and the high volatility of these digital assets calls for a regulatory body for the whole industry. It is also worth mentioning that the environmental threat these cryptocurrencies impose was another hot topic calling for regulatory help, and all these things were dragging down the leading digital assets like BTC and ETH.

On the other hand, the co-founder of Ethereum, Vitalik Buterin, has put forth a proposal titled "Multidimensional EIP-1559," which states that different resources in the Ethereum Virtual Machine have different demands in terms of gas usage. Buterin outlined a complicated proposed change with much technical math, but in a nutshell, the proposal offered two potential solutions using multidimensional pricing.

Recently, Ethereum is undergoing a significant upgrade that will end the proof-of-work consensus, and it remains to be seen whether this proposal will receive approval since the next major upgrade is the next major upgrade. However, this proposal failed to attract any bullish bets, and ETH/USD remained on the downside for the rest of Thursday.

Meanwhile, the recently released FOMC meeting minutes from the Federal Reserve added strength to the US dollar as they showed that the Fed would raise interest rates sooner than expected this year. As a result, the local currency gathered strength and started gaining bullish bets, which weighed on leading cryptocurrencies like BTC and ETH, as they negatively correlate with the US dollar.

ETH/USD Intraday Technical Levels

Daily Technical Levels

Support Resistance

3292.60 3536.11

3178.00 3665.02

3049.09 3779.62

Pivot Point: 3421.51

ETH/USD - Technical Outlook

Ethereum failed to break over the $3,850 resistance level, resulting in a significant drop. ETH fell below the $3,750 and $3,700 support levels, entering the bearish zone. On the hourly timeframe, there was a break below a major contracting triangle with support near $3,800. A closure below $3,600 occurred, as did a close below the 100 hourly simple moving average. The bears have even pushed the price below $3,500.

A low near $3,411 was formed, and the price is presently trying to rebound. The price of ether is currently trading below $3,550 and the 100 hourly simple moving average. The $3,500 threshold is an instant barrier. It's near 23.6 percent Fib retracement level of the decline from the $3,847 swing high to the $3,411 low. The next significant resistance is located near $3,630, close to the 50% Fib retracement level of the decline from the $3,847 swing high to the $3,411 low.

If Ethereum does not begin a new upward trend over $3,550, it may continue to fall. On the downside, an initial support level is near $3,420. The first major support is presently emerging near $3,400. A break below $3,400 might push the price towards the critical $3,320 support in the short term. The next significant support is around $3,200. All the best!


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