In the short term, it seems very unlikely that Ethereum will give you the possibility of big gains.

Ethereum fell again on Tuesday as we continue to see a lot of negativity in crypto markets. Ethereum sees the $1250 level as resistance, and it’s not a huge surprise to see that we are not able to retest that area. The $900 level underneath could be the target, and if we were to break down below there, I think we’ve got a situation where Ethereum will fall much further. Breaking below that level is my base case scenario, but when we get there is a completely open question.

If we would do break down below the $900 level, it’s likely that the market could go down to the $500 level, which is an area where we had seen a little bit of back and forth previously. Because of this, that is my target, and I will be waiting until we get down there in order to start buying. The $500 level begins a massive support level down to the $400 level and would represent a complete “round-trip” of the entire bullish move. I don’t think that this is a market that looks healthy, nor do I believe that the cryptocurrency markets will turn around due to the fact that the Federal Reserve continues to tighten monetary policy.

With a tight monetary policy, risk assets such as cryptocurrency will continue to suffer at the hands of money running away from risk. Risk aversion is like cancer that ripped through the markets, going from one market to the next. Cryptocurrency is far out in the risk spectrum, so I think Ethereum continues to suffer due to this phenomenon. Furthermore, the rollout of “Ethereum 2.0” continues to drag its feet, which is not exactly a positive sign for the market. Don’t get me wrong, I do believe that eventually the entire upgrade will continue and improve the market, but we are not in the right circumstances to see cryptocurrency take off to the upside.

There will come a time when crypto starts to strengthen again, and when it does there will be profits to be made. Ultimately, this is a situation where you may have the possibility of huge windfall profits over the longer term, but in the short term, it seems very unlikely that Ethereum will give you the possibility of big gains.

Keep an eye on volatility and risk appetite, because it will give you an idea as to whether or not we are going to sell off for the day or turn around and try a counter-rally. 

The euro fell a bit on Wednesday as we continue to see more of a “risk-off” type of move in the market. The euro did get a bit of a reprieve during the previous session, but every time we rally it is likely that we will continue to see plenty of sellers running back into the US dollar. The US dollar continues to attract a lot of inflows due to the interest rate differential, and of course, the fact that the Federal Reserve has reiterated its willingness to “go beyond the neutral rate” to fight inflation.

On the other side of the Atlantic Ocean, you have the European Central Bank which has to fight a slowing economy, and is likely to remain much looser than the Federal Reserve. The market has been negative for quite some time, and I just do not see that changing anytime soon. Any time we rally, I will be looking to short the euro on short time frames. The 1.06 level above offers quite a bit of resistance as well, so I think this is a market that cannot be bought anytime soon.

If we were to break above the 1.06 level, then I think the market would have to deal with the 50-day EMA which is currently breaking down below the 1.08 level. The 1.08 level is previous support which should now be resistance based on the “market memory.” The market breaking above there is going to take a huge Herculean effort, something that I do not see happening anytime soon. In fact, based upon the bearish flag that we recently formed, you can extrapolate the move down to the 1.00 level, perhaps even slightly lower.

Keep an eye on volatility and risk appetite, because it will give you an idea as to whether or not we are going to sell off for the day or turn around and try a counter-rally. While the candlestick on Wednesday was not necessarily huge, it reiterates the overall attitude, so it is likely that we would see plenty of people willing to jump on board. If the Federal Reserve changes its tune, we may see this market reverse, but we are so far from that right now as inflation is raging, that I just do not see it happening.

Crypto in general looks horrible right now and Neo is going to get crushed every time it tries to rally.

Neo has fallen slightly during the trading session on Thursday as we continue to see crypto get hammered. Neo is pretty far out on the risk spectrum, so it is difficult to imagine a scenario where it would suddenly take off without some type of help from the outside. The most commonplace of help would be Bitcoin and Ethereum, both of which are at least trying to stabilize, but it is more likely than not going to be a situation where we will ultimately have plenty of sellers.

There is a lot of fear in the world right now, and that does not bode well for crypto, and therefore it is difficult to imagine a minor coin like this suddenly attracting a lot of inflow. If we do rally from here, the market will more likely than not see quite a bit of resistance at the $16.50 level, which is where we had previously seen so much support. “Market memory” could continue to come into the picture, so ultimately this is a simple “fade the rally” type of scenario.

The alternate scenario is that we simply break through the bottom of the candlestick for the trading session on Thursday, but if it did it is likely that the market could go all the way down to the $9.00 level. The 50-Day EMA is sitting at the $20 level, and we would need to break above there before I could even consider buying Neo. Crypto in general looks horrible right now and Neo is going to get crushed every time it tries to rally.

On the downside, it is likely that we would see this market go all the way down to the $5.00 level on a breakdown, with the $7.50 level possibly offering a little bit of support. That would be psychological at best, so it is hard to imagine that it would hold for anything more than a short-term bounce. Once we break through there, I anticipate that even more money would go flowing to the downside. Bitcoin has broken through the $30,000 level, although it is trying to stabilize. If we were to break down below the $25,00 level, then Neo will get the brunt of selling as well due to the fact that it is such a small market.