Ethereum sold off a bit on Wednesday, giving back yesterday's gains and shedding nearly $40 on the day to close just underneath the $600 level on the daily candle. This is not a good look; I think ETH is starting a correction pattern that'll take it lower before it goes higher.
(December 22, 2020 8:30 PM EST)
Things have not gotten better after hours, so it looks like ETH is going lower. $550 is really my target here; if that holds and ETH bounces from there, that will print another higher lower for ETH which should push ETH higher. If not, then ETH's looking at a deeper retracement and will need buyers to step in around $500. I don't forsee that being a problem, as clearly there's a surge in demand and bullishness for ETH and crypto as a whole. I think any pullbacks are buying opportunities. It's hard to justify calling it catching a falling knife if the fall is so short and the knife is so dull. This time next year, I think anyone who bought ETH under $600 will be called "lucky." If you've been following this channel for a while, you know it's not luck; we do this every day. Patience and diligence pays off; it has so far, and it will probably continue to do so.
I'm a buyer on dips. 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.
Grayscale just announced 6 of their most popular crypto funds (including ETHE) are being paused due to demand exceeding their available supplies. Their funds are backed by actual crypto reserves, so in order to accommodate investors (many are institutional and accredited), Grayscale has to buy enough actual ETH (and other cryptos) to comply with their funds' prospectuses.
Support: $600 is under fire and looks like it's going to fall as support once again. This has been a highly contentious price level so it's not until ETH gets an impulsive rally higher again - probably to $700 or higher - that I will consider $600 support again. From here, if ETH doesn't hold at $600, look for support around $550 and then $500. There should be a lot of buyers in that area which is further supported by the 50 Day EMA dab smack in the mdidle of that range, offering further support.
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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