Ethereum Classic sits on the precipice of an additional 30% market decline as bears prepare to turn the screws below the $43.7 support. For the moment, a lower sloping awaited a fourth retest, should ETC fall prey to near-term woes. From there, a small window of opportunity would present itself but ETC would need to break above its MA’s to fully capitalize on its recovery attempt.
Ethereum Classic Daily Chart
Source: ETC/USD, TradingView
Ethereum Classic may not have had an adverse reaction to a wider market sell-off just yet, but it’s worth noting that its price traded below the 20-SMA (red), 50-SMA (yellow) and 200-SMA (green) and faced the threat of short-selling.
Should sellers bust open ETC’s cracks below $43.7 support, the market could see a 16% shakedown to 21 July’s low of $37.67. An extension of these losses could even see ETC test its defenses at $32.4, bringing about a full 30% decline from its press time level.
However, a lower supporting trendline, which has had three points of contacts since April, and a support line of $43.7 buttressed ETC’s near-term trajectory. Some sideways movement could follow over the coming days as bulls attempt to revive momentum. From there, ETC would need to register a convincing close above the confluence of its 20, 50 and 200-SMA’s in order to establish bullish control. Its next major hurdle lay between $78-$84 – a region which ETC has yet to overturn since the crypto crash on 19 May.
Reasoning
ETC’s daily indicators presented a bearish-neutral bias. The Awesome Oscillator flashed red bars and traded slightly below its mid-line, while the Directional Movement Index’s -DI traded above its +DI. These signs indicated that ETC was not primed for an immediate reversal just yet.
However, RSI’s double bottom did instill some hope. A recovery above 60 would help with the introduction of new longs.
Conclusion
Ethereum Classic was exposed to a 30% sell-off should its price weaken below its lower trendline and $43.7 support. The next points of contact would be made at $37.6 and $32.4. However, ETC would expunge many uncertainties should its price flip the abovementioned moving average’s to bullish. A convincing close above $78-$84 would put ETC bulls back in the driver’s seat.
