Ethereum (ETHUSD) Trapped Between Short-Term Moving Averages as Powell Scares

Key Ethereum Takeaways

• Ethereum wobbled between profits and losses on Thursday as traders waited for clear policy direction from the Federal Reserve Chairman Jerome Powell.
• The ETH/USD exchange rate gains footing over its 50-day moving average support to hint at a continued uptrend.
• Nevertheless, upbeat macroeconomic projections in the US risk capping further gains in risk-off markets.

Ethereum was steady during the US trading hours Thursday, fluctuating between profits and losses as traders’ focus shifted on Jerome Powell’s speech at the Wall Street Journal Jobs Summit at 12:05 ET.

Powell Confuses Markets

The Federal Reserve Chairman answered questions on how he views the recent spike in Treasury yields. His remarks were—at best—tasteless, a mere repetition of what his colleague Lael Brainard said earlier this week: that they are keeping an eye on the bonds market.

Mr. Powell added that he would be concerned “by a persistent tightening of financial conditions broadly.” The result was another sharp upside move in the US bond yields, with the interest rate returns on the 10-year Treasury note surging to a new year-to-date high of 1.535 percent.

The ongoing sell-off in the US bonds market has pressured pandemic winners into losses. That includes tech stocks, as well as the leading cryptocurrency Bitcoin, which dropped more than 21 percent last week on rising interest rates. Yields rise when the bond prices fall.

Ethereum, which closely tails the Bitcoin market’s trends, likewise fell and rebound. The second-largest cryptocurrency started plunging lower after Mr. Powell’s remarks. Bitcoin fell 2.51 percent amid the Fed chief’s speech.

ETH/USD maintained its upside bias while holding support near its 50-day moving average (the green wave in the chart above).

Nonetheless, the pair faced equal downside pressure from another moving average, the green 20-DMA, acting as resistance. Ethereum looked stuck, with a short-term fundamentals bias led by Mr. Powell’s remarks favoring bears more than bulls.

Trade Setup

On the whole, Ethereum now trades higher inside an Ascending Channel pattern. A pullback from its upper trendline prompts traders to open a short entry towards the lower trendline. Meanwhile, a rebound from the lower trendline creates a similar long opportunity towards the upper trendline.

A break below the Channel’s lower trendline would risk crashing ETH/USD to lower $1,400. A further breakdown and traders could shift their downside target to upper $1,200s. Conversely, a break above the Channel’s upper trendline would traders extend their long targets to $1,765, a level with historical significance as resistance.