Ethereum leaped higher on Monday, recovering nearly all of last week's losses and pushing above the $600 level, settling just above in a bullish engulfing candle. This is extremely bullish and came as a surprise, showing that both sentiment is bullish and there is buying pressure in higher waters than anticipated.
(November 30, 2020 8:30PM EST)
Outlook: Ethereum rallied on Monday, bouncing off the $500 level and shooting up to $600, settling slightly higher than the recent resistance level. This was likely in reaction to the Guggenheim news and SEC filing, as noted in our Bitcoin analysis for tomorrow, indicating that Guggenheim has an allocation of over half a billion dollars that can be invested in the Grayscale Bitcoin Trust, further validating Wall Street's growing fondness of crypto. I think ETH likely jumped alongside Bitcoin in lieu of this crypto-friendly news, and this could bode well for ETH in the future as well. Don't forget, in 2018 there were talks of an ETH futures contract, similar to the CME Bitcoin futures product that has been trading ever since, and growing. As mature investors enter this space and want to diversify, ETH will be the first alternative they look at after Bitcoin, as it's the second-largest cap in crypto and has arguably the greatest utility potential and an in-progress ETH 2.0 launch whose beacon chain is set to launch tomorrow (Dec. 1st).
From here, I wouldn't be surprised to see ETH pullback alongside BTC, but I think the downside here for ETH is less than that for BTC, which formed a new ATH today. ETH has a long way yet to go before even seeing four figures again let alone a new ATH. I think Q1 - Q2 2021 is probably a realistic timeline for a new ATH in ETH -- in the meantime, I'm a buyer on dips, adding value on pullbacks and accumulating for the inevitable slingshot higher from an overstretched ETH/BTC ratio.
Support: Look for support at $500, which is former resistance and a large, round psychological number, and a level of support as ETH just bounced off it following a nasty holiday weekend selloff. $500 should be pretty strong support, but below that I'll look for value underneath around $450 which is near the 50 Day EMA and ultimately $400, which should be ironclad support.
Resistance: $600 remains resistance as ETH has yet to break impulsively above it, making a few brief closes above before returning back below. If ETH can print an impulsive candle breaking above $600, then eyes will turn to $700, $800, then $1,000.
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