Ethereum Classic: Traders must wait for this to be on the safer side

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

Ethereum Classic has not had a favorable month of July so far. The cryptocurrency’s value kickstarted the month at a high of $63, but constant selling pressure eventually dragged its price below multiple support levels.

Bitcoin’s recent retracement below $30,000 triggered a descending triangle breakdown as well for ETC, with the altcoin now looking to find support at its 22 June low of $35.8. At the time of writing, Ethereum Classic held the 18th position on CMC with a market cap of $4.94 billion.

Ethereum Classic 4-hour chart

Source: ETC/USD, TradingView

As ETC registered a constant decline in value during July, support levels at $49.4, $40, and most recently, $32.1, all crumbled under selling pressure. The fall also led to a descending triangle breakdown as ETC headed to its next support zone of $32.1-$36. Interestingly, this Visible Range’s Point of Control lay within this region as ETC saw peak interest by traders.

If the defensive zone manages to cushion selling pressure, ETC’s price could reset and reverse its trajectory. However, a close below $32 would leave ETC in unchartered waters and exposed to a further decline.

Reasoning 

The Relative Strength Index has traded within an up-channel since 12 July and despite forming a bullish divergence with ETC’s price action, the cues have not been enough to warrant a bounceback. A move below the lower trendline would confirm a bearish outcome and a decline towards $32.1-$36.

The Aroon up recently met with a bearish crossover and moved below the Aroon down – A development that outlined the increase in selling pressure. Momentum was bearish-neutral, according to the Awesome Oscillator, but the fact that the index has not risen above the half-line for nearly 2 months highlighted the dearth of northbound pressure.

Conclusion 

A bearish trend is likely to resume for ETC in the coming days as the price approaches a critical support zone of $32.1-$36. However, there is a chance that the price could reset within this zone and reverse its trajectory to the upside. Traders can look to open long positions within this area but must first wait for signs of a trend reversal to be on the safer side.