Ethereum broke out on Wednesday, cresting above the tightening consolidation pattern shown in the chart below, rallying above the $600 level before closing the daily candle at the highs around $630. This is very bullish as ETH looks to be in an upward-moving pattern of higher lows -- these usually result in a violent breakout to the upside -- I think we may be about to see the beginning of this.
(December 16, 2020 8:30 PM EST)
ETH rallied today alongside Bitcoin as the two broke higher, BTC to a new ATH north of the $20K level and ETH reaching up to retest the local high around $630. ETH finished on a high note near the daily highs indicating we may see some continuation higher, which is all ETH needs to see a higher high and a further rally up to a new local high -- $650 and then $700. I think this is more likely than not, but ETH is lagging behind BTC quite a bit so any ETH rally could be a bit muted vs King Corn.
If ETH gets rejected by the local highs again, we'll see a pullback to at least $600 and 50/50 lower at this point. Immediate support would be $550 and then $500, which should be pretty firm at this point.
Citing other institutional finance news, the CME announced today that it's launching an Ethereum-based futures contract that'll launch in February 2021. This is the second CME-backed crypto futures product, following Bitcoin's launch in 2018. This is different, however, in that the BTC futures launched during or slightly after the 2017 peak when institutions wanted to short it. The ETH CME futures product, supposedly launching in less than 2 months from now, will be launching when ETH is still down more than 50% off its ATH. It seems to me that this would strategically give institutions a new and major mode of exposure to ETH - and I don't imagine it would be to the downside at these prices.
Support: We're not quite out of the woods yet re: the possibility of a pullback. If ETH does pullback, I think a move to $550 or possibly $500 makes a lot of sense. 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. We've got our impulsive candle and bullish close above it -- now we need continuation higher -- or a slight pullback to the $600 level before finding new support there. After that, ETH will look toward $700, $800, and $1,000.
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