Ethereum Classic [ETC] flips bias to bullish, can traders look to buy a pullback?

Disclaimer: The findings of the following analysis are the sole opinions of the writer and should not be considered investment advice

• Ethereum Classic jumped above the short-term range highs at $24.3
• A gap in the charts, if filled, could present a buying opportunity

Ethereum Classic [ETC] has laboured underneath the yoke of the bears since mid-September when ETC fell beneath the $31.3-support level. The past few hours of trading saw the bulls break off their shackles, and a bullish move towards $29 seemed to be brewing.

Here’s AMBCrypto’s Price Prediction for Ethereum Classic [ETC] in 2022-23

Technical analysis revealed some incongruences between the price movement of ETC and the behavior of the asset in the Futures market. Speculators, although bullish in the short-term, might not be arriving in the market in droves to capitalize on Ethereum Classic’s change in fortunes.

Inefficiency combined with a bullish breaker could offer buying opportunities on a pullback

Source: ETC/USDT on TradingView

A set of Fibonacci retracement levels (yellow) was plotted based on ETC’s drop from $42.39 to $20.58. In white, some important horizontal levels were also plotted. In recent weeks, the trend behind Ethereum Classic has been strongly bearish. This was a fact reflected in both the RSI and the OBV. The RSI has been below neutral 50 since mid-September. The OBV was also on a steady decline over nearly two months.

And yet, the past few hours of trading saw a huge surge in prices. Bitcoin managed to climb past the $19.6k-resistance and Ethereum Classic followed in its wake. The 24 hours preceding the time of writing have seen ETC register gains of nearly 12%.

This move also broke the bearish market structure and flipped it to bullish on the 12-hour and daily timeframes. This was a significant development. The $23.2-zone had been a bearish order block previously, but it was turned into a bullish breaker. To the north, another bearish order block lay at $29.

The swift move north also left an inefficiency on the chart from $23.62 to $24.47. Therefore, there is a good chance that a retracement to these levels and into the bullish breaker could be seen soon.

Falling Open Interest suggests the recent rally might not be backed by genuine demand

Source: Coinglass

Although the price charts showed a bullish bias and suggested minor dips could be used to buy, the Open Interest chart did not agree. The past two weeks saw Ethereum Classic range between $$24.3 to $21.3. During this time, the Open Interest had been relatively flat. While the rally from the range lows on Friday was accompanied by an uptick in OI, the recent move past $24.5 was not.

Therefore, it could have been longer-term short positions being closed (short covering) rather than genuine demand behind ETC. Meanwhile, the Long/Short ratio was skewed in favor of Ethereum Classic bulls over the last 24 hours.

Buyers can look to buy a move into the aforementioned gap, but their expectations of a move straight to $29 should be tempered with caution.