ETH is heading for $3,500 as the price regains support and posts a 40% gain

ETH price is back above the 50-week exponential moving average (EMA) – reliable support for the 2020-2021 market boom.

Therefore, the largest altcoin seems poised to scale $3,500 in the coming sessions as the price regained historically strong support on Feb. 5.

ETH is back above the key trend line

A price surge above the 50-week EMA (red wave in the chart below) means it also climbed above $3,000 – psychological support that could serve as the basis for ETH’s next rally.

Weekly ETH/USD price chart | Source: TradingView

The 50-week EMA has been instrumental in sustaining ETH’s uptrend in 2020 and 2021. For example, it acted as a strong accumulation zone during the market correction in the second and third quarters of last year, pushing the price from around $1,700 to $4,951.

As a result, the recapture of the 50-week EMA as support has opened the possibility of further upside moves towards the next resistance target near the 20-week EMA (green wave in the chart above) at around $3,500.

Meanwhile, a decisive break above $3,500 could help ETH test a horizontal resistance trend line forming an ascending triangle pattern. If successful, the altcoin will likely rocket to its previous record high near $5,000.

Weekly ETH/USD price chart | Source: TradingView

The job report could hinder profits

The latest buy in the ETH market comes as shares of Amazon.com Inc surged on Friday, boosting investor confidence in riskier assets including tech stocks and Bitcoin.

Weekly ETH/USD price chart vs Nasdaq Composite | Source: TradingView

ETH has gained more than 11% since then. Rising prices have also boosted gains by 16.3% in the seven-day to date – setting the stage for the best week since August 2021.

However, the rally is at odds with the latest Nonfarm Payrolls (NFP) data, also released on Friday Despite concerns that the Omicron variant could hamper business, companies in the US added 467,000 jobs in January 2022, far exceeding market expectations .

Non-farm payroll data in the US | Source: Bureau of Labor Statistics, Bloomberg

The NFP report highlights how difficult it is for the Federal Reserve (Fed) to predict temporary shifts in the economy. However, it also ensures that the US Federal Reserve will go ahead with its plan to raise short-term interest rates at its March 15-16 meeting.

At a news conference last month, Fed Chair Jerome Powell said he would continue raising rates after the March hike, faster than in the past decade if the job market looks like it’s not stronger and inflation remains above 2% target.

The news sparked a sell-off in risky assets, with data showing that crypto investment products processed $61 million worth of weekly outflows in January 2022.

“It’s important to note that there is still significant investor demand for digital asset investment products, but institutions appear to have responded to the Fed’s announcement by reducing their positions,” said Michael Sonnenshein, executive director of Grayscale Investments .

Pullback scenario

A bearish scenario below the 50-week EMA could see ETH testing the ascending channel lower trendline near $2,500 as support. Meanwhile, a crucial close below this trend line will bring the price closer to the Fib retracement levels as illustrated in the chart below.

Weekly ETH/USD price chart and Fib retracement levels | Source: TradingView

If the bearish scenario materializes, the possibility of ETH falling below $2,000 cannot be ruled out.

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