Ethereum Daily Price Forecast (12/9/20) - Is This the Selloff We've Been Waiting For?

By Crypto Daily FX | Crypto Daily FX | 9 Dec 2020


Ethereum fell on Tuesday, sliding further below the $600 level and closing the day on a bearish note, settling the daily candle near $550. This is bearish of course, as after-hours Ethereum has so far dipped under $550 once. I suspect there is more downside yet to come. The good news is, based on this chart below alone. ETH's downside is more limited than BTC's, and I think ETH will probably find quite a bit of buyers around the $500 level and then a tidal wave of longs around $400-450. A pullback is not necessarily a bad thing; it gives us more time to accumulate at lower prices. I see this as an opportunity to buy value, of which I portend will not be available much longer. 

c21b93184fb3b94d8cd587385a4f1c8e710d278e1c0eedcb1b7dcc62d44c2757.png(December 7, 2020 7:30 PM EST)

I'm far from an ETH maximalist, but I see tremendous upside in the medium-long term of ETH based on its massive and growing network effect and broader adoption of ETH in mainstream applications, let alone the fact that the majority of crypto tokens are ERC-20 and thus built on the Ethereum blockchain. If Ethereum were to fail as a project, most of the crypto ecosystem as we know it would, too. This gives me tremendous confidence in the fundamentals, but as we know, price action doesn't always reflect the fundamentals, nor are the two reflective of each other on any given day. 

Taking a look at the chart above, we see that ETH found quite a bit of resistance around the $600 level, getting rejected by it multiple times. Currently, ETH is pulling back, and we're trying to determine how low it will pullback. I think the 23.6% Fibonacci retracement level makes a lot of sense, as $500 is a large round whole number, a former resistance level, and acted as a support level during the Thanksgiving holiday weekend crypto selloff in which ETH bounced off the $500 level to then recover and make a new local high. If ETH falls below $500, I'll then look for support around $450ish, which may be aligned with the roughly sketched bottom of the ascending channel as seen above. $450 is another battleground level that provided some contention for ETH earlier this year, particularly in August. It's here, at the 38.2% level around $427 that I would expect to find another wave of buyers offering support, protecting the all-important $400 inflection price point.

It appears ETH has given us a bit of direction to the downside - which we forecasted. If we can place some high-probability buy orders at significant levels, I think this would be a great opportunity to increase your ETH stack before a very bullish 2021. I liken 2020 ETH to late 2016 BTC - breaking out of an accumulation zone and forming the early stages of the next bull market. 

Support: I'm looking for support around the $500 level, then $450, and ultimately $400, which is my line in the sand. 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 the immediate resistance until we get an impulsive candle above it and holding it. After that, $700, $800, and $1,000. 

 

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