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The majority of the cryptocurrency market is back in the green today after recovering from Amazon’s rejection of the rumours surrounding its crypto intentions.
Bitcoin is up 7.32%, while Ethereum has seen a much more modest increase of 3.65%. Terra (LUNA) is one of the best performing assets over the last 24; rising 10.38%.
ETC currently ranks at number 18 on CoinMarketCap with a circulating market cap of $6.207B.
Ethereum Classic recent price action
ETC experienced a rapid price surge over the last few days. The asset rose from $46 to $55.80 – an increase of just over 21%. It then saw a violent breakdown back down to the $46 support area.
Last week saw the first bullish signal for the currency when the Moving Averages (MAs) signalled a bullish crossover. This is where the shorter term 50 period MA crossed the longer-term MA to the upside. Price continued to make higher highs and higher lows for the next week.
Fuelled by BTCs price surge to $40,000, based on rumours that Amazon were looking at BTC as a payment method, ETC also experienced a rapid price surge to $55.81.
However soon after Amazon rejected these claims, BTC fell, taking down ETC and the wider market with it. ETC dropped around 17% to find support back at the $46 area again.
ETC/USD price chart by TradingView
ETC/USD 4-hour chart: the end of the upside?
On the four-hour chart, we can see the ETC price failing to make higher lows as it broke through the $50 support turning it back into resistance. Furthermore, it is clear to see a head and shoulders pattern forming which is typically a bearish price action pattern.
If the price breaks this neckline support at $46, then ETC can be expected to reach its next critical support around $40. To further support this bearish bias, the shorter-term MA is still below the longer-term MA.
However, it is also interesting to note that the RSI indicator is providing a conflicting divergence signal. While price found support at the $46 area again, the RSI indicator fell much lower creating a lower low.
Whilst this is a weak divergence signal, it could indicate that ETC still has some more momentum to give a final push back to the upside.
ETC/USD price chart by TradingView
Conclusion
Ethereum Classic now lies in a critical state. A successful break above the $52 resistance and the long term trend line means that ETC could once again resume its movements back to the upside. However, if the $46 support area does not hold, then ETC will break rapidly back down towards the downside, completing the head and shoulders pattern.
