Ethereum pulled back on Friday along with Bitcoin, shedding about $20 and drifting towards the $350 level. This comes as traditional markets sold off into the NY close, with equities, gold, and Bitcoin selling off, and the DXY rising. Selling off into a Friday close going into the weekend is generally a bad omen for Monday.
(October 16, 2020 8:00 PM EST)
Outlook: ETH took a hit today, selling off from the ~$375-380 level and falling to $366 at the close. This is an interesting scenario because if you look at the chart above, you can see a descending channel inside the greater ascending channel. You can also see the double top that formed just under $400 this past Tuesday, but you can also see a series of higher lows near the 50 Day EMA. Overall, this is still a bullish macro trend based off the price action alone, and ETH's fundamentals speak for themselves. I think the global economic environment is extremely negative for other assets; but not ETH. That being said, near-term weakness in equities, forex, and gold may have some negative effect on ETH's price in the short-term, but I see that as a temporary buying opportunity to load up on dips and DCA. I still think Q4 and beyond into 2021-2023 looks extremely bullish for ETH, and even for equities late this year into 2021, which should only help lift crypto like ETH.
Support: Ether is currently trading above the 50 and 200 Day EMA's, which should act as support below around ~$355 and 280 respectively. A good test we should see in the next few days is whether the 50 Day EMA holds as support around $357, which is close enough to the psychological level of $350. If ETH falls below that, look for support around the ascending trendline I drew in black above, then $300. If ETH falls below the 200 Day EMA around $280, the overall uptrend is in jeopardy. At that point, my line in the sand would be the $225 level which was a previously very supportive level of consolidation.
Resistance: Ethereum appears to have found resistance above around the $400 level, which was also resistive in Q3 2017, but we all know what happened once it broke above there. Look for resistance levels every $50 - 100, as they're round numbers, especially $500. After that, $600-700 is another key fib level, and the actual market value of ETH based on normalization of the ETH/BTC ratio, which is inevitable.
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