Ethereum rallied a bit on Tuesday, initially reaching up above the $1,100 level before pulling back, closing the daily candle in the green around $1,050. Though the candle is green it's a neutral candle at best right as there's a long wick above indicating rallies were being sold into, not dips were being bought. I think ETH continues to drift lower a bit and find support where it will charge up momentum the next wave higher.
(January 12, 2021 8:30 PM EST)
Ethereum went back and forth on Tuesday and recovered a bit by the close of the daily candle to print a sort of ugly-looking candle. This doesn't give me a ton of confidence based on the preceding day's candle which is enormously bearish, so until ETH finds some stronger support lower and shows signs of a bottoming pattern, I'll be waiting on the sidelines to accumulate at lower prices. I'm tremendously bullish on ETH and any price below $1,000 is likely excellent value in the medium-long term, however I think buying now following yesterday's selloff is catching a bit of a falling knife here in the short-term.
Going forward, I'll be looking for support at one of the Fibonacci retracement levels above - $950 (weaker), $800/50% Fib (stronger), $700/61.8% (ironclad). ETH, like BTC, is going higher, and not far down the line either, I just don't want to chase the trade. By now you should have a majority of your medium-long term position at a substantially lower cost basis as I have been alluding to for months, now is simply when we add to our core position on pullbacks for value. After all, 2021 should be an even more bullish year for crypto than 2020, so buying on dips here is a privilege given how low ETH is in the grand scheme of things.
I think the best strategy here is to buy the dips and even earn ETH wherever possible. Otherwise, DCA is the way to go and possibly store some dry powder for another 'larger' dip if we're lucky enough to get one in Q1 2021. I think 2021 will be substantially better for 2021, although ETH has outperformed BTC in 2020 so really it's no surprise there.
Support: Look for local support around $1,000, which has been pierced and is actively being contested. Below that, look for support around the 38.2% fib at $950, which has also been briefly pierced and a weaker short-term target, and my primary support at the 50% fib around $800, which I think will bear a wall of buying and offer strong support. This is further support by a trend of higher lows, a former resistance level turned support level and the rapidly upturning 50 Day EMA which is now above $700 and climbing. $700 is my line in the sand - extremely unlikely ETH gets to this level let alone beneath it.
Resistance: Near-term resistance looks to be around $1,300, just under the ATH around $1,400. If we can break above that, then ETH will look toward $1,500 and then $2,000.
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