In the short term it looks as if the buyers are willing to at least defend this market.

• The Ethereum market rallied a bit during the trading session on Thursday to reach the $1875 level.
• We are still looking at the $2000 level as a potential resistance barrier, and therefore it’s not until we break above there that I would consider this market broken out to the upside.
• The 200 Day EMA above is also offering quite a bit of psychological and technical resistance as well.

Ethereum Hanging Around the $2000 Level

Keep in mind that the Ethereum market is stuck between the 200 Day EMA above, and the 50 Day EMA below. This typically means that there is a bit of a squeeze coming, and the fact that we are hanging around the $2000 level also suggests that there are a lot of people out there looking at this market currently. Because of this, I believe that it is probably a situation where we are going to continue to see volatility pick up and therefore a lot of confusion.

If we break down below the 50 Day EMA, then the $1500 level will almost certainly be targeted. Breaking down below that level then opens up the possibility of a move down to the $1200 level, which is the top of the previous consolidation area that we had broken out of. The $1200 level should cause quite a bit of noise, and therefore I think it could be a massive support zone.

On the other hand, if we can break above the 200 Day EMA, then Ethereum could really start to take off to the upside, perhaps opening up the possibility of a bigger move to the $2300 level, followed by the $2500 level. Keep in mind that there is a certain amount of momentum behind the Ethereum market, as we have seen big moves towards the upgrade of this network. That obviously is very bullish for this market, and it’s worth noting that Ethereum has outperformed other cryptocurrencies as a result.

Given enough time, we will have to make a bigger decision, but in the short term it looks as if the buyers are willing to at least defend this market. It is because of this that even if cryptocurrency overall starts to fall, I believe that the Ethereum market will probably outperform going into the future as well. The one caveat would be if there is some type of pickup in the implementation of the upgrade.

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At this point, I would not chase the market, but you certainly cannot sell it until we see something happen in the bond market that shows traders are taking the Federal Reserve seriously again.

• The S&P 500 Index rallied quite nicely on Friday, and we threatened the top of the shooting star from the previous day.
• If the market does break above the top of the shooting star, then it opens up the possibility of the 4300 level being targeted.
• The 4300 level is an area that I think you will have to continue to see a lot of interest in, as it had been massive resistance previously.

If we were to break above the 4300 level, then it is possible that the market would really start to take off at that point. Not only would it be a break of significant resistance, would also show the market clearing the 200-day EMA, which is obviously a very bullish sign as well. At this point, we are getting a little overextended, but this is all about the interest rates in America more than anything else.

Tightening Monetary Policy

The Federal Reserve lost so much credibility over the last 14 years that the market is completely ignoring the fact that they continue to reiterate that they are going to tighten monetary policy. These clowns have spoon-fed Wall Street for so long, that they do not understand the idea of a tightening monetary policy for any significant amount of time. Because of this, the market is swimming upstream, but if there does come a point where Wall Street finally believes that the Federal Reserve is going to fight inflation for real, this market is going to crater.

What it is worth, markets typically gain about 20% during bear market rallies, and we are clearly at that point over in the NASDAQ. In other words, we could be getting close to the end, and that’s why think the 4300 level above is so interesting. The candlestick on Thursday looks like a really good beginning to a pullback, but at this point, it looks like we still have some work to do. If the market is comfortable holding the S&P 500 E-mini contract through the weekend, that would be a very bullish statement as well. At this point, I would not chase the market, but you certainly cannot sell it until we see something happen in the bond market that shows traders are taking the Federal Reserve seriously again.

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