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Ethereum Classic Price Analysis: 6 May

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Ethereum Classic
Source: Unsplash

Ethereum Classic is currently undergoing its largest bullish rally in 2021. Since the start of May, the asset has been up by 190% in the charts, registering a new all-time high at $118. The surge has been incredible and true to its altcoin nature, extremely volatile. However, there are signs that the price is going to exhibit a strong correction over the next few days, with its momentum slowly dying out.

Ethereum Classic 6-hour chart

ETC/USDT on Trading View

The present analysis does not exhibit any proper patterns so the guidelines for a short-position are based on the Fibonacci lines calculated based on its previous top at $49.8. While ETC’s price should not have surged beyond $88 in the current rally, this particular range can now be considered an appropriate range for correction.

Breaching past its -1.272 Fib line, the rally is starting to slow down. Decreasing trading volume is a decisive sign at press time, as buying pressure is seemingly reducing in the 12-hour time frame.

Market Rationals

ETC/USDT on Trading View

Relative Strength Index is also tapering at a previous high range, which may indicate an eventual dump of buying pressure. Stochastic RSI is more uncertain but the selling pressure should be kicking in anytime in the chart.

On-balance Volume is currently higher than the end of April, and the chances of buyers selling for profit at this range are more likely than a week before.

Keeping the above narratives and range in mind, a short position can be entered at $115. An appropriate stop can be placed at $128, and distinguished by the Fib-line. Profits can be taken at any range between $88 and $74, but a correction to $74 should unfold over the next few days. While the Risk/Reward ratio is 3.08x, it is important to note that it is incredibly risky to short ETC at the moment, since buying pressure may invariably return if market sentiment triggers another rally.

Biraajmaan covers market trends of major cryptocurrencies. As a graduate in engineering, his interests lie in Blockchain technology. With over a year as a journalist, his articles focus on US and UK markets.