Ethereum Classic retraces to key support – Will bulls prevail?

Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion

• Ethereum Classic [ETC] hit a key price ceiling zone in 2023
• More long positions liquidated on the lower timeframe

Ethereum Classic [ETC] noted a sharp retracement after hitting a key price ceiling area just below $24. So far, the highest ETC has climbed in 2023 is $24.95 on 4 February. The stretch between $23 – $24 has been a key supply area in Q1/Q2 2023, exposing ETC to pullbacks whenever the price forayed into the area. 

Read Ethereum Classic [ETC] Price Prediction 2023-24 

Meanwhile, Bitcoin [BTC] has struggled to clear the $30.8k-resistance, setting it up for range extension above $30k for the past few days. 

Will the 420 support level hold?

Source: ETC/USDT on TradingView

The retracement briefly breached the $20-support before the bulls came out to defend it. At the time of writing, ETC’s price was $20.21.

The $20-price level was a key support in January and February 2023 when zoomed out on the daily chart. Similarly, the $23 – $24 zone was a supply zone on the daily charts. 

Back to the ETC’s 4-hour chart, below the short-term support, lays an FVG (Fair Value Gap) – a price action imbalance between $18.1 – $19.4 (white). Most often, price action always fills these imbalances before continuing with the trend direction. So, the $18 – $20 zone can act as a solid bullish area. 

So, a rebound from the support area could set ETC to retest the supply area of the $23-24 region again. If that’s the case, especially if BTC doesn’t drop below $30k, buying at this level could offer a good risk ratio. 

A drop below the FVG level of $18 will invalidate the bullish thesis, making a drop to $17 and $16 within arm’s length. 

Meanwhile, key technical indicators moved sideways. In particular, the RSI (Relative Strength Index) flattened out above the neutral position while the OBV (On Balance Volume) dipped slightly and moved sideways – Buying pressure and demand eased. Similarly, the ADX (Average Directional Index) dropped below 20, reinforcing the lack of a clear trend. 

Long positions discouraged

Source: Coinglass

According to Coinglass, over $200k worth of long positions were wrecked on the 4-hour timeframe, as of the time of writing. However, short positions suffered less than $50k liquidations in the same period, underscoring the short-term bearish sentiment in the Futures market. 

How much are 1,10,100 ETCs worth today? 

However, BTC’s stay above $30k portends overall bullish sentiment for ETC. So, ETC traders should track the king coin’s price action before making moves for optimized set-ups.