Ethereum pulled back a bit on Thursday, reaching down to the $550 level before finding a bit of support, closing the day around $565. Ethereum continues to drift lower in what seems like more of a muted consolidation than anything, especially vs Bitcoin which has given back more % than ETH. This is a short-term downtrend, but this appears to be a proportionately smaller one relative to the recent rally, possibly even smaller. This is bullish for ETH, as Ethereum doesn't have a tremendous amount of downside from here relative to BTC. Still, I think ETH has lower to go, as I haven't seen any indications that there is a bullish reversal starting just yet.
(December 10, 2020 7:30 PM EST)
ETH looks to have more downside on the daily chart here, likely targeting the $500 level or maybe the 50 Day EMA just underneath around $480. That seems to be a pretty proportionate pullback after a large rally but one that pales in comparison to Bitcoin's Oct-Nov run. From there, I think ETH should find significant support, rallying to a new local high and then grinding back up towards the $1,000 level.
I've said this before and I'll say it again, I think ETH is tremendous value below $1,000 over the medium-long term. As the ETH 2.0 roadmap becomes a little more clear (Vitalik updated it recently) and the arguably most important blockchain ecosystem continues to gobble up market share, active developers, and more crypto projects continue to build on top of it, this probably points to a very bright future for ETH. Short-term dips are to be bought - I'm adding here and on dips, as I love the value proposition at this price level.
As far as a maximum downside, I think $400 is our rock bottom at this point. With the Grayscale Ethereum trust seeing record inflows and 3iQ launching an IPO of an Ethereum exchange-traded trust, The Ether Fund (QETH.U) on the Toronto Stock Exchange, I think the downside is relatively limited. Major traditional financial institutions don't like to attach their name, let alone to staff, build, and fund a new product unless they're confident it will be popular and profitable. If that's not validation in today's market, I'm not sure what is.
It appears ETH has given us a bit of direction to the downside - which we forecasted. If we can place some high-probability buy orders at significant levels, I think this would be a great opportunity to increase your ETH stack before a very bullish 2021. I liken 2020 ETH to late 2016 BTC - breaking out of an accumulation zone and forming the early stages of the next bull market.
Support: I'm looking for support around the $500 level, then $450, and ultimately $400, which is my line in the sand. The 50 Daily EMA is rapidly approaching $500, and the 200 Day EMA is approaching the $400 level, which should give further support to the long-term uptrend.
Resistance: $600 is immediate resistance until we get an impulsive candle above it and holding it, which I don't forsee for probably a few weeks, maybe not until 2021. After that, ETH will look toward $700, $800, and $1,000.
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