The value of the largest smart contracts platform, Ethereum continues to gain strength against the US dollar, especially with its recent move above $1,600. Recovery is expected to continue after the Federal Open Market Committee (FOMC) meeting and decision on the interest rate hike in two days.
Experts say that cryptos may generally retreat before then, thus shaking out weak hangs before carrying on with the bullish move aiming for highs above $2,000. Ethereum price had pulled back to trade at $1,594 at the time of writing with support around $1,500 expected to absorb the growing selling pressure.
Ethereum Price Primed for A Massive Breakout – Here’re the Levels to Watch
Investors are anxiously waiting for the Federal Reserve decision on interest rate hikes and expect the regulator to continue with its strict measures to curb economic growth. However, market watchers are eyeing a 25-basis points increase, relatively lower than the December hike of 50-basis points.
This positive sentiment hails from a general inflation drop for December to 6.5% from 7.1% recorded for November. Although the drop is not big enough to see the Fed lift the foot off the gas pedal completely, it signals that the economy is headed in the right direction.
CPI is an indicator for the Fed to either tighten its monetary measures used to combat inflation or loosen its grip – allowing markets to recover, especially those considered to have a high volatility index like digital assets.
Meanwhile, Ethereum price is still in a position to break out significantly despite the resistance at $1,680. Since the tentative support at $1,600 has already been infiltrated, ETH price might be forced to look down to $1,500 before the resumption of its uptrend. Based on the daily timeframe chart, the 200-day Exponential Moving Average (EMA) (in purple) solidifies support in that area.
Adding credence to the short-term bearish outlook in Ethereum price is a buy signal from the Moving Average Convergence Divergence (MACD) indicator. The MACD line in blue confirmed the call to traders to offload their bags while locking in profits (shaking off weak hands) by flipping beneath the signal line in blue.
Doctor Profit, analyst and trader on Twitter shared with his large following on Twitter that “weak hands are getting shaken out, market awaits FOMC in two days.” The analyst terms the pullback a “fake dumb” meant to “shake out weak hands” ahead of the next breakout in a few days.