Disclaimer: The findings of the following analysis are the sole opinions of the writer and should not be taken as investment advice
As the broader market saw a hefty sell-off post Bitcoin’s retracement below $58k, Ethereum Classic threatened to overturn the bottom trendline which has been active for over 6 months. Should ETC’s defenses fail around $44, the market would be exposed to a potential 40% decline back to its April levels.
Bearish readings on the RSI, MACD, and Awesome Oscillator were ominous as ETC lay at the behest of near-term support levels in order to cushion losses. At the time of writing, ETC was trading at $49.05, down by 12% over the last 24 hours.
Ethereum Classic Daily Chart
Since the start of October, Ethereum Classic has kept within an-channel and eyed a clean break above its 200-SMA (green) to kickstart a rally. However, a broader market sell-off seems to have put a premature end to ETC’s trajectory.
Its price, at press time, was at the risk of a breakdown from the pattern should bears target a decisive close $53. If so, bulls would be under tremendous pressure to counterattack at the $48.2-support. The defensive region coincided with a lower sloping trendline which ETC has respected since late April.
Should ETC further weaken below $44.3, short-selling would become a large threat. The next areas of recovery lay at $37.6 and $32.1, which represented an additional 15%-30% sell-off.
Meanwhile, near-term losses could rise from weak readings on the RSI and a sell signal along the MACD and Directional Movement Index. However, RSI’s move into the oversold region would prompt recovery on the chart.
Broader market sell-offs present traders with a good opportunity to bag alts at a discounted level. Such was the case with ETC as well as it flashed an ideal buy opportunity at $48.2.
Such an outcome would also allow ETC to maintain higher lows within a long-serving bottom trendline. However, ETC’s trajectory will take a big hit should its price weaken below $44.3. Expect a bear market thereon.