Ethereum rallied on Wednesday alongside Bitcoin, initially pulling back below the $1,000 level before bouncing hard and launching up to above $1,100 on the daily candle. This is a bullish candle indicating buying pressure and a strong finish to the trading session which will likely carry into Thursday's session.
(January 13, 2021 8:30 PM EST)
Ethereum recovered nicely on Wednesday, bouncing off the $1,000 level indicating support and a higher low and ending the day near the highs of the day north of $1,100. It seems like the sellers may be exhausted and the buyers are adding on dips once again. If that's the case, I'll be looking for ETH to continue upwards and retest the $1,300 - $1,400 resistance area which is right around the ATH from January 2018. If ETH breaks above that, then all bets are off and I think buy orders trying to capture the break will trigger, sending ETH up to $2,000.
However, if this is an exhausted rally and a deadcat bounce, then I could see ETH retesting the $1,300 region again before getting rejected to form a double-top around, leading to another selloff. 30%+ corrections are rarely completed within one or two days so I suspect there may be more downside yet to come, which is fine because ETH should find higher support and print a higher low well above the previous zones. Plus, I don't think ETH can even break below $800 at this point, which would be a greater than 50% retracement and test of the rising 50 Day EMA which is at $732 and rising.
Going forward, I'll be looking for support at one of the Fibonacci retracement levels above - $950 (weaker), $800/50% Fib (stronger), $700/61.8% (ironclad). ETH, like BTC, is going higher, and not far down the line either, I just don't want to chase the trade. By now you should have a majority of your medium-long term position at a substantially lower cost basis as I have been alluding to for months, now is simply when we add to our core position on pullbacks for value. After all, 2021 should be an even more bullish year for crypto than 2020, so buying on dips here is a privilege given how low ETH is in the grand scheme of things.
I think the best strategy here is to buy the dips and even earn ETH wherever possible. Otherwise, DCA is the way to go and possibly store some dry powder for another 'larger' dip if we're lucky enough to get one in Q1 2021. I think 2021 will be substantially better for 2021, although ETH has outperformed BTC in 2020 so really it's no surprise there.
Support: Look for local support around $1,000, which has been contested and was successfully tested today. Below that, look for support around the 38.2% fib at $950, which has also been briefly pierced and a weaker short-term target, and my primary support at the 50% fib around $800, which I think will bear a wall of buying and offer strong support. This is further support by a trend of higher lows, a former resistance level turned support level and the rapidly upturning 50 Day EMA which is now above $700 and climbing. $700 is my line in the sand - extremely unlikely ETH gets to this level let alone beneath it.
Resistance: Near-term resistance looks to be around $1,300, just under the ATH around $1,400. If we can break above that, then ETH will look toward $1,500 and then $2,000.
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