Ethereum price falls as BTC takes center stage after US CPI announcement
|- Ethereum price shows a clear lack of buying interest after the CPI announcement on January 12.
- This lack of buying pressure combined with declining momentum seen in RSI hints that a reversal is likely.
- Invalidation of the bearish thesis will occur if ETH produces a four-hour candlestick close above $1,679.
Ethereum price shows a stagnation of its move after it slices through a crucial hurdle, indicating that the rally is exhausting. The US Consumer Price Index (CPI) was announced on January 12, which caused Bitcoin price to whipsaw for a while, but eventually the big crypto rallied higher. Since all eyes were on BTC, investors seem to have lost interest in ETH as it took a backseat. Interestingly, ETH was up 2.80% and BTC was at 3.30% after the US CPI numbers were announced.
Therefore, investors need to be prepared for a reversal that could trigger a countertrend rally.
Also Read: Will US CPI release whipsaw Bitcoin price to $16,500?
Ethereum price at the brink of reversal
Ethereum price has rallied 14% since it retested the recently breached parallel channel on January 8. As noted in a previous publication, ETH was already lackluster before it shattered through $1,375, a crucial hurdle.
The same can be seen in the Relative Strength Index (RSI), a momentum indicator, which has produced lower highs in the overbought region. Compared to the higher highs on Ethereum price, it clearly shows a non-conformity that is termed as bearish divergence.
This setup often results in a drop in the underlying asset’s market value aka a trend reversal favoring bears. A confirmation of the countertrend rally will occur after ETH produces a four-hour candlestick close below $1,375. Beyond this level, Ethereum price could revisit the $1,215, $1,150 and $1,071 support levels.
ETH/USDT 4-hour chart
While things are looking bearish for Ethereum price, a sustenance of the uptrend that leads to a four-hour candlestick close above $1,679 will create a higher high and invalidate the bearish thesis.
In such a case, Ethereum price will continue its uptrend and retest the $1,700 psychological level.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.