Ethereum broke to the upside during the week ending November 22nd, blasting past the $500 level and reaching up above $550, closing the week near the highs. ETH has started to follow Bitcoin's upside momentum, solidifying ETH's bull market thesis, and grinding its way to a new yearly high.
(November 22, 2020 8:30 PM EST)
Outlook: Ethereum broke out to the upside again last week, impulsively rising above the $500 and $550 levels before closing the weekly candle just above $550. Ethereum appears to be starting to play catch up to Bitcoin which has catapulted to just about its 2017 ATH's, stretching the ETH/BTC ratio even further in BTC's favor. However, this is not a bad thing as this ratio must revert at some point, and when it does, it will likely slingshot ETH higher to a historically more sustainable level. I believe this 'slingshot' has started, as Bitcoin is likely nearing its local top, in which case investors and traders will rotate out of BTC and into alts, ETH being the first and foremost to benefit.
This coming week, I think ETH targets the $600 level as BTC targets $20,000. If ETH breaks above $600, look for a move up to $700 and then another $100 up until $1,000. If ETH falls from here or gets rejected by the $600 level, look for a pullback to $500, $450, and ultimately $400, which would be value pickups and excellent medium-long term accumulation levels. I'm not a seller of ETH, only accumulating, and I'm a buyer on all dips.
Though the stars are aligning for a significant pullback in all markets over the next 3-4 weeks in lieu of US Presidential election drama, COVID second waves washing over the US and EU, a negative GDP forecast, no stimulus bill progress, half of PPP small business relief efforts being discontinued, unemployment benefits about to expire for tens of millions of Americans, and most importantly, falling 10 year yields, rising bond yields, and institutional funds front-running quarterly rebalancing out of equity outperformance and into bonds. This is a perfect storm for a double-bottom in markets, and I expect moderate pullbacks in ETH notwithstanding, however I will back up a dumptruck to add to my long-term position.
Support: Look for support around the $500 level, which is a recent resistance level that's since been surpassed and the former yearly high. Below that, look for support around the $450 and $400 levels, which have been the recent trading range up until the recent breakout, and are important inflection levels. These levels are further supported by the 50 Week EMA below $312 and the 200 Week EMA around $270, both of which are turning up.
Resistance: I think $600 is resistive and ETH probably gets to that level when Bitcoin starts to pull back, unfortunately dragging ETH down with it. That being said, $600 is not a particularly important level other than it being a round number and roughly the top of the ascending channel drawn in the first chart above. Above $600, look for resistance every $100; $700, $800, $900, and $1,000. I think $1,000 is likely as important resistance as $20,000 is for Bitcoin. Above $1,000, I think ETH is in moonshot territory, as $1,400 was probably just an arbitrary blowoff top in January 2018, similar to Bitcoin's historic highs in 2011 and 2013.
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