Why Ethereum Classic traders must be patient before entering a position

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

The response to Ethereum Classic’s hike to a near 12-week high at $77 has been quite brutal. Since making the move, the altcoin has suffered a drastic pullback, retracing by 20% to $61.5. Moreover, the market was exposed to another sharp decline. Right now, the bulls need to take certain measures to tilt the tide in their favor.

At the time of writing, Ethereum Classic was trading at $64.2, down by 7% over the last 24 hours.

Ethereum Classic 4-hour chart

Source: ETC/USD, TradingView

The Fibonacci tool was used on ETC’s 12 July swing low of $57.5 and 17 August’s swing high of $77.3 to plot out important levels on its 4-hour chart. At press time, ETC had found support at its 38.2% Fibonacci level ($62.2) and renewed buying pressure might allow to alt to hike towards the $68-mark.

The 50% retracement level, one which often confirms or denies a trend direction, is an important area to observe as well. If ETC registers a close below $57.24, the bears would likely initiate further drawdowns. This would have a drastic effect on the alt’s mid-term outlook.

Reasoning

ETC’s indicators held their bearish position, but there were some signs of bullish resistance as well. The Awesome Oscillator shifted below the half-line on 18 August for the first time in 15 days. However, its peaks held steady, implying that selling pressure was being countered by the bulls.

Interestingly, the MACD’s histogram noted receding bearish momentum. Meanwhile, the Directional Movement Index’s -DI traded above the +DI as bears maintained a grip on market proceedings.

Conclusion

ETC’s 38.2% Fibonacci level ($62.2) did match up to the selling pressure, but bears were in a position to threaten another breakdown moving forward. In such a case, the focus would be on the 50% retracement level ($57.24). The safest bet for traders would be to let the market play out before entering a long or short position.