ETH - On which side will it break-out?
Today, the FED will decide on the interest rate in the USA. It is almost certain (99% probability) that the rate will remain unchanged. The most important aspect to focus on in this meeting’s minutes is the FED Balance Sheet. Will they stop tightening the balance sheet this month, or will they wait until mid-year as stated in January?
Leading up to the FOMC meeting, ETH is squeezing within its 4-hour pattern, forming equal highs and higher lows. This suggests a potential breakout to the upside.
I have outlined two possible scenarios:
1. ETH breaks through the resistance zone with strong volume, then successfully retests it as support.
2. ETH fails to break the resistance zone and instead breaks below the rising trendline.
Scenario 1:
Many stop-loss orders are accumulating just above the equal highs. If ETH manages to break out of the resistance zone with high volume and fill the gap, there is a chance it will flip this resistance into support. To confirm this, we need multiple candle closes above the resistance zone.
However, there is also a possibility that the FOMC meeting could trigger a price pump, only to drop immediately afterward, taking out stop-losses along the way.
Scenario 2:
In this case, ETH breaks below its rising trendline. For this to be a valid breakdown, it must be accompanied by high volume and a new lower low. If ETH breaks the trendline without forming a new lower low, it could be a fake-out. Therefore, we need confirmation: a lower low followed by a trendline retest.
Interesting Observations:
Stochastic RSI on the Daily Timeframe is rising rapidly into the overbought zone, while ETH remains in consolidation. Typically, we want the momentum of the Stochastic RSI to increase alongside price action. However, that is not happening here.
If the Stochastic RSI enters the overbought area and then crosses downward, it could put selling pressure on ETH, potentially leading to new lows in this downtrend.
Conclusion:
My base case is that ETH will sweep liquidity/stop-losses during the FOMC meeting with an initial upside move, followed by a sustainable correction downward in the coming days or weeks, accompanied by a decrease in the Stochastic RSI.
We’ll have to wait and see how the FOMC meeting unfolds.
Thanks for your support!
Drop a like and leave a comment to have a conversation about this topic. Make sure to follow me so you don’t miss out on the next analysis.
Leading up to the FOMC meeting, ETH is squeezing within its 4-hour pattern, forming equal highs and higher lows. This suggests a potential breakout to the upside.
I have outlined two possible scenarios:
1. ETH breaks through the resistance zone with strong volume, then successfully retests it as support.
2. ETH fails to break the resistance zone and instead breaks below the rising trendline.
Scenario 1:
Many stop-loss orders are accumulating just above the equal highs. If ETH manages to break out of the resistance zone with high volume and fill the gap, there is a chance it will flip this resistance into support. To confirm this, we need multiple candle closes above the resistance zone.
However, there is also a possibility that the FOMC meeting could trigger a price pump, only to drop immediately afterward, taking out stop-losses along the way.
Scenario 2:
In this case, ETH breaks below its rising trendline. For this to be a valid breakdown, it must be accompanied by high volume and a new lower low. If ETH breaks the trendline without forming a new lower low, it could be a fake-out. Therefore, we need confirmation: a lower low followed by a trendline retest.
Interesting Observations:
Stochastic RSI on the Daily Timeframe is rising rapidly into the overbought zone, while ETH remains in consolidation. Typically, we want the momentum of the Stochastic RSI to increase alongside price action. However, that is not happening here.
If the Stochastic RSI enters the overbought area and then crosses downward, it could put selling pressure on ETH, potentially leading to new lows in this downtrend.
Conclusion:
My base case is that ETH will sweep liquidity/stop-losses during the FOMC meeting with an initial upside move, followed by a sustainable correction downward in the coming days or weeks, accompanied by a decrease in the Stochastic RSI.
We’ll have to wait and see how the FOMC meeting unfolds.
Thanks for your support!
Drop a like and leave a comment to have a conversation about this topic. Make sure to follow me so you don’t miss out on the next analysis.
Trade active
We know have a breakout on the upside taking out the 4h FVG. Watch out for potential volatility (FOMC) later today.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.