All is quiet on the crypto front after U.S. Fed Powell’s remarks

June 23, 2022 - 2 weeks ago
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If it somehow feels as if cryptocurrency markets are relatively quiet, that’s because they have been since the weekend carnage.

After Bitcoin ploughed below US$19,000.00, traders have become more conservative and exercised more caution to avoid getting caught on the wrong side of the trade as renewed recession fears weighed on investors.

Meanwhile, U.S. Federal Reserve Chair Jerome Powell acknowledged that the central bank’s battle against high inflation could tip a so-far resilient U.S. economy into a recession on Wednesday.

While testifying before the Senate Banking Committee, Powell said, “Over coming months, we will be looking for compelling evidence that inflation is moving down, consistent with inflation returning to 2%.”

“We anticipate that ongoing rate increases will be appropriate; the pace of those changes will continue to depend on the incoming data and the evolving outlook for the economy.”

U.S. Fed Powell will return Friday to testimony to Congress.

As many traders plough through the negative and positive news updates, it is assessed from a technical perspective, that the longer we remain above the US$19,000.00 support, the greater the chances are of witnessing the challenge of US$23,500.00.

Based on the technical indicators for Bitcoin, the Relative Strength Index (RSI) 3-daily pattern has rebounded out from the extreme oversold condition, while the Moving Average Convergence Divergence (MACD) oscillator supports a negative bias, while the ADX (trend) indicator supports a trending market.

However, viewing the topside, there are many hurdles to clear before any supportive bullish call.

The near-term cap is seen at US$28.600.00, with the immediate resistance from US$23,500.00. Reassess from there.

Conversely, although the US$19,000.00 was penetrated at the weekend, a daily close beneath this level observes little support until US$12,300.00. Reassess from there.

Daily Chart of Bitcoin

After a rather gloomy weekend, the world’s second-largest cryptocurrency, Ethereum, continues to hover above the US$1,000 mark (or the support at US$936.00) after the head of the U.S. Federal Reserve said policymakers are doing all they can to bring inflation under control after reaching 8.6% in the U.S.

U.S. Federal Reserve Chair Jerome Powell made the remarks on Wednesday to members of the Senate Banking Committee as part of a two-day semiannual monetary policy report to Congress.

He said the Fed is highly attentive to inflation risks and determined to take the measures necessary to restore price stability.

“We are strongly committed to bringing inflation back down, and we are moving expeditiously to do so,” Powell told lawmakers at a hearing held by the Senate Committee on Banking, Housing, and Urban Affairs.

Meanwhile, although many traders view Ethereum as a “bearish market”, it is assessed that only a daily close beneath US$936.00 would be considered negative and expect further downward pressure, with the measured trajectory seen to the area of US$620.00. Reassess from there.

Viewing the topside, the near-term top (resistance) is observed from US$1,640-70, with the immediate assessment viewed to US$1,300-60.

Based on the technical assessment, the Relative Strength Index (RSI) 3-daily and weekly ‘lookback’ indicators have rebounded out of the extreme oversold condition.

Meanwhile, the Moving Average Convergence Divergence (MACD) oscillator supports a negative signal, although it is in a prime position of potentially posting a positive bias, while the ADX (trend) indicator is now supporting a ranging market (no trend).

Daily Chart of Ethereum

Binance, the cryptocurrency issued by the Binance exchange, has slowly formed a familiar bullish pattern as the RSI and the MACD is now in a prime position to support a potential ‘bullish breakout’ as the broad support holds from US$US$196.00 to US$200.00.

Based on the technical pattern, the Relative Strength Index (RSI) 3-daily and weekly ‘lookback’ indicators hold a weak positive signal, while the Moving Average Convergence Divergence (MACD) oscillator is on the verge of breaking out to a positive signal, while the ADX (trend) indicator is supporting a ranging market.

While the market sustains above the US$US$196.00 to US$200.00 level, we may see further improvements to the bullish case in the short-term, mainly supported by the technical patterns.

Therefore, the market bulls need to reclaim the $236.00 resistance level to reinstate the upside call to US$280.00. Reassess from there.

If we witness a daily close beneath US$196.00, we may trigger further weakness towards a potential measured target of US$150.00 – Reassess from there.

Daily Chart of Binance

Cardano’s (ADA/USD) price is potentially forming a bullish pattern and, as a result, may break out of its consolidation pattern and elevate from the major support at US$0.42.

Based on the Relative Strength Index (RSI) 3-daily ‘lookback’ indicator holds a weak negative bias, while at the same time, the Moving Average Convergence Divergence (MACD) holds a weak negative bias, and the ADX (trend) indicator supports a ranging market.

While the US$0.42 support is intact, overall, it keeps the market bulls focused on the hurdle of US$0.62/US$0.63, which, if cleared, opens the path further towards the region of US$0.72 to US$0.77.

However, if we witness a decisive break of US$0.42 may give a devastating outlook for the bullish assessment, as this could open the decline further into uncharted waters and give a measured move from a US$0.42 break to US$0.30-US0.33.

Daily Chart of Cardano

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