Ethereum receives firm rejection from further upside potential, set to dip back to $2,200
|- Ethereum price action received on Wednesday a firm rejection on the 55-day SMA.
- ETH price is set to drop lower next week, towards $2,400 in the first phase and next $2,200.
- With the FED on the docket next week, a rate hike could push ETH price below $2,000.
Ethereum (ETH) price action is alerting investors to brace themself for a shock wave to come next week. Currently, the tail risk and headwinds for ETH price action are based on geopolitical worries, stagflation fears, and technical downtrend elements. Add a possible hawkish FED next week that will start hiking at least 25 basis points, and by this scaring investors away from risk assets, the stage looks set for a massive exodus of investors out of cryptocurrencies Ethereum in specific.
Ethereum price set to trade below $2,000 with hawkish FED opening the exit-doors for investors on risk assets
Ethereum price action looks to be signaling to be in good health, but the patient itself and his underlying condition are far from good. The latest red light came from the upward rejection against the 55-day Simple Moving Average (SMA) at $2,800. With that move, bears had yet again another window to enter and push price action to the downside, as investors will refrain from engaging in full size into risk assets as the FED is due to hike rates next week.
ETH price looks technically set to first dip below $2,400 at the monthly S1 support level, breaking the low of this week. Another leg lower, for example, if the FED would come out hawkish or more negative news flow out of Ukraine, would spell out a break below $2,278.42 towards $1,928. This is because only the low of 2022 is the only element for bulls to cling on if they want to try and catch a possible falling knife, as where the area below $2,000 holds more support and puts ETH back at that distribution level than in the summer of 2021 sparked a rally of around 188%.
ETH/USD weekly chart
As shown on Wednesday, a few tweets or some positive comments from a state head-on Ukraine could easily cause a turnaround. Or imagine the FED refraining from hiking and keeping its powder dry until the geopolitical situation is resolved before starting hiking would open the door for investors to reput their positions in risk assets. Expect a quick pop above the 55-day SMA in ETH price action towards $3,018. The next target would be $3,391 with a possible test at the 200-day SMA at $3,357, but that would depend on the impact of the message or event that is at hand.
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