Ethereum recovered a bit on Tuesday, initially falling below the $600 level before turning around, bouncing off $600 and eventually closing the daily candle around $630. This is a pretty neutral candle given the preceding bearish candle, indicating ETH is on the defensive against the sellers but hasn't given up control. If ETH continues to exhibit weakness and retest the $600 level, then I'm inclined to believe ETH is headed lower before it heads higher.
$600 - $650 will likely be ETH's short-term range as it figures out where it's going to go next. If ETH continues to grind power and put pressure on the $600 level, then we'll probably see a pullback to the $550 level, or possibly $500 which is supported by the 50 Day EMA around $520. However, if ETH rebounds and regains its upside momentum, an impulsive break above $650 will lead ETH higher to $700 and beyond.
I'm a buyer on dips. Ultimately, I think DCA is the way to go and to store some dry powder for another 'larger' dip if we're lucky enough to get one in Q1 2021. I think the bullish exuberance has peaked during December, so a period of consolidation would not be unwarranted for some time until the next macro leg higher across the crypto board.
Grayscale just announced 6 of their most popular crypto funds (including ETHE) are being paused due to demand exceeding their available supplies. Their funds are backed by actual crypto reserves, so in order to accommodate investors (many are institutional and accredited), Grayscale has to buy enough actual ETH (and other cryptos) to comply with their funds' prospectuses.
Going forward, I think ETH is likely to catch up to BTC a bit, probably rising with the tide up to between the $700 - $800 levels. As of the time of this writing, ETH is still down over 50% from its January 2018 ATH of about $1,420. That just goes to show how underpriced ETH is relative to BTC and how much upside it has going forward. I'm a buyer on dips, and not considering selling or shorting under any circumstance anytime soon.
Support: At this point, I think it's fair to say $600 is tentative support. It's been tested and held thus far, but it is a newer local high and has already been tested twice, so I don't think it would take a tremendous amount of selling to break below it once again. I think a move to $550 or possibly $500 makes a lot of sense, but like no lower than that, if ETH even gets that low.
Resistance: Assuming ETH holds $600 as support, ETH's next targets are $700, $800, and $1,000. Then we can start talking about new ATH's, as I doubt there's much resistance between $1,000 and $1,400.
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