Ethereum slides on Binance breach, then recovers as macro risks dominate

Ethereum fell on Thursday after news broke of the security breach at Binance. A sharp jump in liquidations across the market made the move to the downside worse.

The token did recover in the end, though, once Binance promised to make customers whole and fears of wider contagion faded. Risk appetite also drew support from growing optimism over the US-Iran talks and the possibility of cheaper oil.

Ahead of us, the macro environment is still difficult: inflation risks, worries about growth, expectations that the Fed will tighten further and geopolitical uncertainty all cap the chances of a lasting rebound.

A breakthrough in the US-Iran negotiations, or more dovish signals from the Fed, is probably needed before the current bearish trend turns. An unexpected Republican sweep in the midterms could add support too, on the expectation of fiscal expansion. Conversely, a Democratic sweep might weigh further on Ethereum absent a breakthrough in the US-Iran talks — or worse, if Trump chooses to escalate the war.

ETHEREUM TECHNICAL ANALYSIS – DAILY TIMEFRAME

Ethereum has been falling steadily for a month on the daily timeframe, with macro headwinds continuing to press on the cryptocurrency. A descending trendline marks out the bearish momentum. Sellers can be expected to lean on that trendline, defining their risk above it, as they keep aiming at the 1,900 level. Buyers, by contrast, will be watching for a break higher so they can pile in for a run toward 3,400, with 2,575 as the initial target.

ETHEREUM TECHNICAL ANALYSIS – 4 HOUR TIMEFRAME

On the 4 hour timeframe there is a second trendline acting as resistance. Should price break the minor trendline, sellers may prefer to divide their positions between the minor and the major line. Buyers, meanwhile, need breakouts to position for fresh highs, with the 2,575 level standing as the first major target.

ETHEREUM TECHNICAL ANALYSIS – 1 HOUR TIMEFRAME

Little can be added for the 1 hour timeframe, where sellers get a better risk-to-reward setup around the trendlines and buyers need breakouts to open the way to new highs.

UPCOMING CATALYSTS

US Job Openings figures and the midterm elections are both due today, though the first results will only arrive early tomorrow. The ADP report and the ISM Services PMI follow tomorrow. Thursday brings the latest US Jobless Claims numbers, and the week closes on Friday with the US NFP report and the University of Michigan consumer sentiment survey.