Ethereum bounces but ETH price in danger of turning $2.3K into new resistance

Ethereum’s native token Ether (ETH) reclaimed $2,000 in the early New York trading hours Wednesday as crypto traders assessed the Federal Reserve Chairman Jerome Powell’s prepared congressional testimony.

The ETH/USD exchange rate surged 7.19% to reach its intraday high of $2,019.90. Likewise, Bitcoin (BTC), whose 7-day positive correlation with Ether stands at 0.84 above zero, climbed, albeit by a modest 0.75%, hitting $32,379.

Powell gave his semi-annual monetary policy report to Congress on Wednesday, a day after the U.S. consumer price index report showed an increase of 0.9% between May and June, reaching 5.4% for the first time in three decades.

In prepared remarks ahead of his congressional testimony, Powell noted that inflation in the coming months would remain elevated. Nevertheless, the central bank chief added that rising consumer prices wouldn’t deter them away from their ongoing bond-buying policy.

Powell said that the threshold of limiting its $120 billion monthly debt purchases—that have cushioned the U.S. economy throughout the coronavirus pandemic—is “still a way off.” In saying so, he cited the U.S. labor markets, stating that its full recovery “still has a long way to go.”

The statements appeared after a Bank of America survey of the global fund managers, who thought the global economy would keep on improving, dropped dramatically from 91% in March to 47% in July. The same poll named long Bitcoin—bet on rising BTC/USD rates—one of the most crowded trades alongside long ESG and long commodities.

But both Bitcoin and Ether dropped after Tuesday’s CPI report and ahead of Powell’s testimony release, thus drawing flak from critics for not behaving like a haven in the face of higher consumer prices. Part of the reasons were fears that the Fed would signal tapering its bond purchases sometime in 2020 and hike its benchmark lending rates only in January 2023.

Powell’s assurance that their plans to taper is still away injected short-term optimism in the cryptocurrency market, benefiting Bitcoin and Ether alike. 

Just saw the news. Inflation! Are any of us surprised? Government prints more dollars, so the other ones are worth less. Happy to be a #bitcoin hodler. The best inflation hedge.

— Tim Draper (@TimDraper) July 14, 2021

 A technical bounce?

Ether’s latest upside also appeared in the wake of a technical support level having a recent history of limiting ETH/USD’s bearish bias.

The said price floor serves as a rising trendline in a symmetrical triangle pattern. Ether has been fluctuating inside the said structure since mid-June, as shown in the chart above, which raises its probability to retest the triangle’s resistance trendline (above the $2,300 level) in the coming sessions.

Nevertheless, Symmetric Triangles are continuation patterns that…