• Ethereum had a rough session on Thursday, as the US dollar spiked after a massive amount of volatility entered the market due to the CPI number being released at 0.4% month over month, instead of the anticipated 0.2%.
• Ultimately, this is a market that I think continues to see a lot of volatility in general, but it is worth noting that we did bounce a bit from the consolidation area.
• This is a market that I think continues to see a lot of noise just below, but that does not necessarily mean that we cannot reenter that consolidation area yet again.

If we break down below the bottom of the candlestick for the trading session on Thursday, it would of course be a very negative turn of events, and I think it opens the possibility of Ethereum dropping down to the $1000 level again. If we were to break down below there, then it’s likely that we would see Ethereum drop down to the $400 level, which is the area where the previous bull run started. This would be a complete “round-trip”, but that would be nothing new for crypto.
 

Don’t Trust Rallies

If we break higher from here, the 50-Day EMA sits underneath the $1500 level, and it’s an area that I think will cause a lot of resistance. I don’t necessarily think it’s going to be easy to even get a bullish move, but if we do, I think it’s only a matter of time before the sellers come in and overwhelm everything, as risk appetite is simply not strong enough to support the crypto markets now.

In fact, it’s worth noting that the high price in Ethereum lately was shortly before the merge happened, and therefore it shows that all the good news has been priced into the market at this point. I do think at this point we are either going to go sideways or perhaps break down quite drastically. All things being equal, it’s a situation where we need to have monetary policy be supportive of risk assets coming out of the Federal Reserve, something that’s nowhere near happening. The market will continue to be very volatile, but I still think that you cannot trust rallies now because the market is likely to see plenty of volatility from other markets that may show itself over here.

(Click on image to enlarge)

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