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Charts of The Week - Ethereum ready to Break out, is Selloff over?

Charts of the Week - Technical Analysis May 04, 2022
• Ethereum ready to Break out, is Selloff over?
• China Buying Russian Oil at Discount Prices.
• Gold-Bears Exhausted as Investors await Fed decision today

Charts of the Week - Technical Analysis

  • Ethereum ready to Break out, is Selloff over?
  • China Buying Russian Oil at Discount Prices.
  • Gold-Bears Exhausted as Investors await Fed decision today

XETUSD / Ethereum - Ethereum is ready to Break out, is Selloff over?

  • Resistance Zone: $3400 to $3550
  • Key Resistance: $3170
  • Major Pivot Point: $2945
  • Key Support Level: $2700
  • Support Zone: $2530 to $2700
  • 200 Day SMA – Green Line
  • 50 Day SMA – Red Line
  • CBOE VIX – Volatility Index @ 29.25 -3.09 (-9.55%)

Trade Insights - Ethereum

XET/USD – Chart shows Viable long positions above the Key Support Level at $2700, with the first target of the Major Pivot Point at $2945 and after confirmation above the Pivot then further long positions towards the Key Resistance level at $3170 and then the test of Resistance Zone between $3400 to $3550.

Alternatively, Short positions Key Support Level to head towards the Support Zone between $2530 to $2460, and if Bears continue to push the prices down then possibly further short position towards $2300.

XET/USD Chart Analysis:  

Directional bias - 2 Weeks 

XET/USD chart shows that Ethereum has created two higher highs and three higher lows forming an ascending channel starting in January 2022. The pair has found support at $2725 after completing the formation of a triangle pattern in the upward moving parallel channel. Back in February 2022, Ethereum touched the trough of $2300. It completed the ascending triangle and prices jumped back sharply higher. After witnessing another pullback by 13th March yet again, the price jumped back to fin the resistance at the higher limit around $3550 level of the ascending channel on the chart. The recent selloff starts on 4th April. Due to the broad weakness in the markets has created an opportunity. As the prices are now down back to the lower limit of the channel at about $2700.

At this stage, the price action suggests the Ethereum prices have somewhat consolidated and set up for reversal as apparently, the sell-off is over. After a possible breakout if prices stay above $2945 Major Pivot Point, then a quick upswing could be forecasted.   

The RSI Indicator shows that the prices are consolidating the indicator is hovering at around 40 points. The prices are trading well below the 50-day SMA red line and quite below the Green 200 Day SMA line indicating a bearish bias of the investor.

Fundamental Overview: 

While ETH could expect an upswing soon investors need to keep an eye on the major cryptocurrency Bitcoin. At this stage, it seems Ethereum is displaying evidence of consolidations at the lower edge of the ascending channel and forecasting a potential upswing towards the Resistance Zone at $3400. This shows there could be a recovery in the Bitcoin/BTC and XRP/Ripple too.

USO/USD Crude Oil - China Buying Russian Oil at Discount Prices.

It is likely that Beijing could follow the path of Shanghai in terms of lockdown and zero covid policy. This could build pressure on the already reduced Crude oil demand there. As per the reports, Independent Chinese refineries have started importing oil at very discounted prices from Russia. Given that China is the biggest import of oil in the world and resuming supply from Russia will put upward pressure on the oil prices as there were worries about demand shortage from China due to the lockdown. On top of that American Petroleum Institute (API) reported that oil stockpiles have dropped by 3.5 million barrels against the forecast of 4.5 million barrels. Lower inventory is a result of higher oil exports by the US recently. Later this week on Thursday OPEC is due to meet and is expected to keep the oil production lower to ensure the oil prices stay above the $100 psychological level.

Oil Technical analysis

After testing a minor resistance at $105 oil is now just sitting above the major Pivot point on the chart at $102 and could slip under in today’s session as this is also the point where the prices face rejection from the 50-day SMA red line. 

Trade Insights - USO/USD

USO/USD –Viable Short positions below the Pivot point at $102. Level targeting the Key Support level at $98, after this price may decline further lower towards the Support zone between $95.00 to $93.00.

Alternatively, Long positions above the Pivot point at $102. heading upwards towards the Key resistance Level at $109 and then towards the resistance zone at $112 to $114.

XAU/ USD – Gold-Bears Exhausted as Investors await Fed decision today.  

Gold prices managed to apparently find support at the Pivot point of $1850 after roughly a 13-day streak of Decline and red candle formations. The prices are staying within the parallel descending Channel heading sharply lower with every session. It seems gold might have already started consolidation at $1850 as Bears have apparently displayed exhaustion. And the demand is slowly accumulating at this support level while the investors are still contemplating the move ahead of the much-awaited Fed decision today.

XAU/USD chart
XAU/USD chart

Technical analysis- XAU/USD

The formation of Bullish Divergence around the Pivot point at $1850 is signaling a reversal in the downtrend in Gold. Sellers have exhausted apparently. And there could be a fresh bullish push ahead waiting for the announcement today by the Feds. The Pivot point is also a soft support level that could help contain the prices here. If there is a jump in the prices today, then it will not be difficult to breach the key resistance level at $1895 and regain the $1900 territory again by the precious metal. 

RSI indicator is hovering at 35 points. It has not gone lower with the recent lower low formed by gold indicating any lower move could be buying opportunity from here on. While the prices are still quite below the 50 Day SMA indicates bearishness in the asset prices. The Green 200 Day SMA line is rising towards the $1850 level forming a support for the Gold prices.

Trade Insights

XAU/USD – Viable Long positions above the Major Pivot point at $1850 targeting the Key Resistance Level at $1895. Then the Resistance Zone between $1920 to $1940. Then advancing towards the next resistance level at the $1960 mark.

Alternatively, Short positions below the Pivot Point at $1850 heading towards the Key Support level at $1830. And if weakness persists then targeting the Support Zone at $1800 to $1780 cluster.

Click to see Market Insight: Market Insight - Sell In May And Go Away?

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The information provided is of a general nature and is not intended to be personalised financial advice. The information provided is not intended to be a substitute for professional advice. You may seek appropriate personalised financial advice from a qualified professional to suit your individual circumstances.

Trading in Rockfort Markets derivative products may not be suitable for everyone as derivative products may be considered as high risk. Please ensure that you understand the risks involved. A Product Disclosure Statement can be obtained here and should be considered before trading with us.

Vishal, R.

May 4, 2022

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