Ethereum broke higher again on Thursday, reaching up towards the $700 level before getting rejected hard, giving back most of the gains and closing the daily candle just below the $650 level. ETH's rejection around $675 formed an ugly looking candle, though it still ended up being enough for a positive candlestick. I think ETH's got more of an uphill battle right now as it faces lower liquidity and interest vs Bitcoin and today was merely short-term profit-taking.
(December 17, 2020 8:30 PM EST)
I still have a bullish bias for ETH, as the fundamentals are shining and the technicals all point to a continued uptrend. If ETH continues higher, it'll need to break the $675 and then $700 levels which may serve as resistance. Above there, I think we could see some FOMO return as ETH will not be far off from $800 and then $1,000 for the first time since January 2018.
If ETH pulls back further, all eyes will be on $600 as we'll be looking to see if ETH finds support there or breaks down below it once again. If it does break down below $600, I'll be looking for support around $550, which should be fairly strong support here given the recent consolidation pattern of higher lows. Below that, $500 is probably my bottom, though I'm not sure ETH will even get that low. However, if ETH bounces off $600, then that's fabulous news and a new higher low for ETH which should propel ETH to new local highs and a strong confirmation of the bull market and uptrend.
Citing other institutional finance news, the CME announced yesterday 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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