Ethereum fell on Monday to start the week, initially rallying up towards the local highs around $670 before dropping down to the $600 level where it ultimately found support. This is a bearish candle in the short-term, as this looks like a bit of a rejection off the top of the channel ETH has been slowly recovering in since earlier this year. I think this might be alluding to a bit of a pullback going into the new year, possibly for the last time before the real moon mission begins.
(December 21, 2020 8:30 PM EST)
If this is the beginning of a pullback for ETH, $600 will almost certainly be retested as support, which has held thus far. However, if $600 gets breached to the downside again, ETH will go looking for support around the $550 level and then the 50 Day EMA just above $500. This should be very strong support, as the current uptrend has been supported by the 50 Day EMA since early October.
If this is just a weak start to the week and ETH recovers quickly, then ETH could go looking toward the $700 level again -- it will just have to break above $675 first, which has been local resistance of late. It is an insignificant number, I think it more has to do with the timing of BTC finding resistance at a more significant level itself which affects ETH and other cryptos.
I'm a buyer on dips, this week included. Ultimately, I think DCA is the way to go and to store some dry powder for another 'larger' dip if we're lucky enough to get one in Q1 2021. I think the bullish exuberance has peaked during December, so a period of consolidation would not be unwarranted for some time until the next macro leg higher across the crypto board.
Going forward, I think ETH is likely to catch up to BTC a bit, probably rising with the tide up to between the $700 - $800 levels. As of the time of this writing, ETH is still down over 50% from its January 2018 ATH of about $1,420. That just goes to show how underpriced ETH is relative to BTC and how much upside it has going forward. I'm a buyer on dips, and not considering selling or shorting under any circumstance anytime soon.
Support: At this point, I think it's fair to say $600 is tentative support. We got our impulsive candle breaking above $600 and two consecutive bullish days thereafter, so 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: Assuming ETH holds $600 as support, ETH's next targets are $700, $800, and $1,000. Then we can start talking about new ATH's, as I doubt there's much resistance between $1,000 and $1,400.
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