Has Ethereum Classic finally broken out of a downtrend
Disclaimer: The findings of the following analysis are the sole opinions of the writer and should not be considered investment advice
Bitcoin was nearing a zone of resistance from $40.6k to $42k, while Bitcoin Dominance was also shedding some value in recent hours as it dropped from 42.6% to 41.8% in the 24 hours preceding press time. This showed that, in the near term, altcoins might perform as well as Bitcoin, and even better in some cases. Ethereum Classic has been one such. After struggling for a while with a trendline resistance, Ethereum Classic made strong gains in the past week.
In white is the trendline resistance that ETC has struggled to beat since mid-November of 2021. In mid-January, ETC did break out past this trendline and stalled at the $33.5 resistance level, briefly moving higher to $34.74 before selling pressure intensified and forced ETC as low as $21.2.
This move from $34.74 to $21.2 was used to plot a set of Fibonacci retracement lines (yellow). It can be seen that the $27 area offered no demand from buyers on the way down, and when the price tried to recover in the following week, it had a long upper candlewick to $36.3. This showed that, at that time, sellers were strong.
Since then, the price of ETC has steadily ground its way up and those sell orders have been absorbed by the buyers. Market structure has been flipped in the near term to bullish, as the previous downtrend’s lower high at $26.3 has now been retested as support.
The $28.6-$30 area will be an area where bulls and bears will skirmish once more, but if Bitcoin can climb to $40.6k and $42k, Ethereum Classic could follow suit and climb as high as $31.84 and $33.5.
At the time of writing, the RSI on the hourly chart was heavily in the oversold territory even as the price reached into a pocket of liquidity just above $28. Therefore, a few hours of sideways trading at this level could reset the RSI for its next leg upward.
The OBV has been steadily climbing in recent days to show that demand was behind the recent rally.
The Awesome Oscillator also climbed steadily above the zero line.
Bitcoin was approaching a strong resistance in the $42k area. Although Ethereum Classic could register some gains in the next few days, its longer-term trend remained bearish, as did most of the other top coins in the market including Bitcoin.