Ethereum extends losses after the US CPI as risk sentiment deteriorates further. What's next?

<p class="MsoNormal" style="margin: 0 0 11px; line-height: 106%; font-family: Aptos, sans-serif; font-size: 15px;">Ethereum tumbled yesterday following the hotter than expected <a href="https://investinglive.com/news/us-september-cpi-vs-3-6-expected-0/" rel="follow">US Core CPI</a>, with a broader risk-off sentiment in the crypto market adding to the pressure. </p><p class="MsoNormal" style="margin: 0 0 11px; line-height: 106%; font-family: Aptos, sans-serif; font-size: 15px;">The limited changes in rate hike expectations and the dovish repricing further out the curve, though, suggest that markets might be getting increasingly more concerned about the growth outlook. </p><p class="MsoNormal" style="margin: 0 0 11px; line-height: 106%; font-family: Aptos, sans-serif; font-size: 15px;">If these expectations get confirmed by deteriorating economic data, Ethereum could remain under pressure as traders will likely reduce exposure to risk-sensitive assets like cryptocurrencies.</p><p class="MsoNormal" style="margin: 0 0 11px; line-height: 106%; font-family: Aptos, sans-serif; font-size: 15px;">On the positive side, Interactive Brokers launched Ethereum staking for eligible US clients on October 13, broadening access to staking rewards. Meanwhile, Ethereum's Glamsterdam upgrade is progressing through testnet development, focused on increasing network capacity and improving transaction processing. These developments, though, are longer-term and are unlikely to offset the macro-driven negatives in the short term. </p><p class="MsoNormal" style="margin: 0 0 11px; line-height: 106%; font-family: Aptos, sans-serif; font-size: 15px;">Looking ahead, we have the Flash PMIs, the FOMC, US–Iran negotiations and the US midterm elections as potentially strong catalysts. Deteriorating economic data could increase concerns about growth, further weighing on risk sentiment and Ethereum. </p><p class="MsoNormal" style="margin: 0 0 11px; line-height: 106%; font-family: Aptos, sans-serif; font-size: 15px;">What could change the picture completely would be an end to the US–Iran war, as that would ease inflationary pressures, improve the growth outlook and likely support a broader recovery in risk assets, including Ethereum. </p><p class="MsoNormal" style="margin: 0 0 11px; line-height: 106%; font-family: Aptos, sans-serif; font-size: 15px;"> </p><p class="MsoNormal" style="margin: 0 0 11px; line-height: 106%; font-family: Aptos, sans-serif; font-size: 15px;">ETHEREUM TECHNICAL ANALYSIS – DAILY TIMEFRAME</p><p></p><p>On the daily chart, we can see that <a href="https://www.tradingview.com/symbols/ETHUSD/" rel="follow" style="color: rgba(70, 120, 134, 1); text-decoration: underline;">Ethereum</a>is trading around the key 2,360 support zone and the major trendline. We can expect the dip-buyers to step in around these levels, with a defined risk below the trendline, to position for a rally into the 3,400 level. The sellers, on the other hand, will need the price to break below the trendline to open the door for new lows and target the 1,900 level next.</p><p class="MsoNormal" style="margin: 0 0 11px; line-height: 106%; font-family: Aptos, sans-serif; font-size: 15px;">ETHEREUM TECHNICAL ANALYSIS – 4 HOUR TIMEFRAME</p><p></p><p>On the 4 hour chart, since the price made a new lower low, we now have a downward trendline defining the bearish momentum. If we get a pullback into the downward trendline, we can expect the sellers to lean on it, with a defined risk above it, to keep targeting a break below the major upward trendline. The buyers, on the other hand, will want to see the price breaking higher to increase the bullish bets into new highs, with the 2,570 level as the first target. </p><p class="MsoNormal" style="margin: 0 0 11px; line-height: 106%; font-family: Aptos, sans-serif; font-size: 15px;">ETHEREUM TECHNICAL ANALYSIS – 1 HOUR TIMEFRAME</p><p></p><p>On the 1 hour chart, we can see the price broke below the tight box yesterday following the US CPI report and extended the drop as more sellers piled in to target the 2,360 support and the trendline. There’s not much we can add here as the buyers will have a better risk to reward setup around the support and the major upward trendline, while the sellers will need a break below the upward trendline to open the door for new lows. The red lines define the <a href="https://investinglive.com/Education/trading-tip-know-the-average-daily-range-adr-20220207/" rel="follow" style="color: rgba(70, 120, 134, 1); text-decoration: underline;">average daily range</a> for today.</p><p class="MsoNormal" style="margin: 0 0 11px; line-height: 106%; font-family: Aptos, sans-serif; font-size: 15px;">UPCOMING CATALYSTS</p><p class="MsoNormal" style="margin: 0 0 11px; font-family: Aptos, sans-serif; line-height: 103%; font-size: 15px;"><a href="https://investinglive.com/EconomicCalendar" rel="follow" style="color: rgba(70, 120, 134, 1); text-decoration: underline;">Today</a> we get the US PPI, the US Retail Sales and the latest US Jobless Claims figures. We have also Fed Chair Warsh speaking very late in the day in a fireside chat with IMF Managing Director Georgieva. He’s against forward guidance, so he’s unlikely to give any policy signal, but it’s worth keeping an eye on it.</p> This article was written by Giuseppe Dellamotta at investinglive.com.