Ethereum continues pull back on Monday

Ethereum markets initially tried to rally during the day on Monday, but then rolled over again to break down below the $300 level. This is a continuation of the selling pressure that we have seen over the last couple of days but let us not forget that we are still very much in and uptrend when it comes to crypto, not just Ethereum.

Testing former resistance

By initially trying to rally, and then pulling back, it shows that we are going to continue to struggle a bit but we are testing the top of the previous rectangle that we had been stuck with. At this point, the crypto markets may have gotten a bit ahead of themselves, most notably the Bitcoin market, so it does have a negative effect on some of these other crypto markets. Ethereum does tend to follow Bitcoin as it is “second fiddle” in general, so we need to see Bitcoin help as well. At this point though, the most important thing on this chart is the $285 level as it was significant resistance previously.

Moving averages

Looking at the longer-term daily chart, the red 50 day EMA has crossed above the 200 day EMA, which is considered to be the “golden cross.” That is a strong sign for longer-term traders, as it typically will bring in holders. At this point, the 50 day EMA is starting to reach towards the $250 level so we could think of that as a bit of a “floor” in the market. That being said, we are at the bottom of the candle stick for the day as we read the chart, but ultimately there should be plenty of support between here and $250 to turn the market around.

Federal Reserve

One of the biggest mistakes that crypto traders tend to make is that they forget they are trading a currency pair, just as you do in the Forex markets. With the Federal Reserve looking to cut interest rates, it puts bearish pressure on the US dollar, so that should help most crypto, with Ethereum being one of the most popular this should of course translate over here. With the attitude of the market being one that may have gotten a little bit ahead of itself, it makes sense that perhaps we get a little bit of a pullback. However, from a fundamental standpoint the US dollar should continue to soften. Something that you can look at as a secondary indicator is the US Dollar Index, or perhaps even the EUR/USD Forex pair, as the Euro is the “anti-dollar.” If the Euro rallies, in general the soft US dollar should help crypto as well.

The trade going forward

The trade going forward is to simply look for value in crypto, not just in Ethereum but in all major crypto. At this point I believe that the Ethereum market will go looking towards the $350 level yet again but it’s going to take some time to get there, but obviously we are in an uptrend.