A sell-off in the general markets on Thursday and Friday morning leading into Friday’s monthly options expiry spilled over into the cryptocurrency market and by Friday afternoon, the SPDR S&P 500. ETF Trust (NYSE:SPY) was bouncing up slightly off the open and pulling the crypto sector up with it.
Ethereum Classic has been trading more in tandem with Bitcoin (CRYPTO: BTC) than Ethereum (CRYPTO: ETH) recently, in a consistent downtrend off the November highs. That may be set to change because Ethereum Classic not only held above the key level, but on Friday printed a bullish pattern on the daily chart.
See Also: How to Buy Ethereum Classic
The Ethereum Classic Chart: Ethereum Classic’s downtrend dragged the crypto down almost 50% from the Nov. 9 high of $65.33 to a low of $33.31 on Wednesday. The crypto then bounced up slightly from the level but on Friday retested it as support.
The retest of the support level and subsequent bounce up has caused the crypto to print a bullish double bottom pattern at the level. If the pattern is recognized, Ethereum Classic could be in for a bullish weekend ahead. It is worth noting that Bitcoin also printed a double bottom pattern near the $45,500 level on Friday.
By Friday afternoon, Ethereum Classic was working to print a bullish hammer candlestick on the daily chart, which can often signal a reversal to the upside is in the cards. If Ethereum Classic is able to trade up above the most recent lower high — the $36.82 level that was printed on Thursday — it will negate the downtrend and could set the crypto into a new uptrend.
Ethereum Classic’s relative strength index (RSI) has been hovering near or below the 30% level since Dec. 4. When a stock or crypto’s RSI reaches or exceeds the level, it becomes oversold, which can be a buy signal for technical traders.
To make a meaningful move to the upside over the coming days, Ethereum Classic will need to see increasing bullish volume. On Friday, the cryptos lower-than-average volume signaled continued consolidation at about 63,540 compared to the average 10-day volume of 147,257.
Ethereum Classic is trading below the eight-day and 21-day exponential moving averages (EMAs), with the eight-day EMA trending below the 21-day, both of which are bearish indicators. The crypto is also trading below the 50-day simple moving average, which indicates longer-term sentiment is bearish.
- For the crypto to push up and print a higher high, bulls want to see big bullish volume come in as a reaction to the double bottom pattern and hammer candlestick. There is resistance above at $40.57 and $44.66.
- Bears want to see big bearish volume come in and drop the crypto down under the key $32 level, which would cause Ethereum Classic to print a lower low and confirm the downtrend is still intact. Ethereum Classic has support below at $32.17 and $27.67.
Want direct analysis? Find me in the BZ Pro lounge! Click here for a free trial.