Technical Analysis of ETH/USD for May 20, 2021

Crypto Industry News:

The China Internet Finance Association has signed a joint statement with the China Banking Association and China Payment and Clearing Association, alerting the public to the risks of investing in cryptocurrencies.

According to a report by Shanghai Securities News, the aforementioned industry association within the People's Bank of China (PBoC) issued a statement entitled "Preventing the Risks of Speculation in Virtual Currency Trading".

The joint statement is reportedly an extension of previous PBoC statements regarding Bitcoin and cryptographic threats. As part of the communique, the associations outlined four issues related to cryptocurrency investment, starting by calling on their members to understand the nature of digital currencies.

According to the announcement, cryptocurrencies are not "real currency" and should not be used as a medium for the exchange of goods and services. In July, the Arbitration Commission issued a ruling according to whose Bitcoin is a virtual commodity.

Second, the associations warned financial institutions and other member organizations not to engage in cryptocurrency-related business transactions. The part of the document specifically relating to online platforms reads:

"Online platform corporate members will not provide services such as online business premises, commercial exposures, marketing promotions, paid rerouting, etc. for virtual currency business activities. Where guidance or related problems are found, they will immediately contact relevant departments and will provide technical support for related investigations and assistance. "

Industry associations have also warned retail traders to be wary of the risks associated with cryptocurrency investments, while urging member institutions to comply with existing digital currency laws.

China banned the issuance of tokens and the trading of cryptocurrencies in 2017, forcing major exchanges to relocate their activities outside the country.

Technical Market Outlook:

The ETH/USD pair has bounced from the low made at the level of $2,038 and hit the level of $2,929, which is a 38% Fibonacci retracement of the last wave down. There is a lower channel line as well around this level, so the local bounce towards the technical resistance seen at the levels of $3,122, $3,184 and $2,955 is possible. The market is in full control of bears and only a strong breakout above the level of $2,929 (38% Fibonacci retracement of the last wave down) would temporary change the outlook to bullish (but still corrective in nature). The next target for bears is seen at the level of $1,941.

Weekly Pivot Points:

WR3 - $4,859

WR2 - $4,608

WR1 - $3,835

Weekly Pivot - $3,623

WS1 - $2,857

WS2 - $2,581

WS3 - $1,823

Trading Recommendations:

The longer term up trend on the Ethereum continues despite the local counter-trend corrections. The next long term target for ETH/USD is seen at the level of $5,000. The key long term technical support is seen at the level of $3,000, so only a weekly candle close below this level will invalidate the bullish scenario.

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The material has been provided by InstaForex Company - www.instaforex.com

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