Ethereum pulled back a bit on Friday, initially falling before bouncing off the $400 level, closing the day around $410. This is to be expected as the $400 level is an inflection point and there should be more than usual buying and selling around this area.
(October 23, 2020 8:00 PM EST)
Outlook: Ethereum pulled back a bit on Friday, probably attributed to profit-taking after a strong week. As you can see in the Daily chart above for ETH, we are in a short-term uptrend within a greater uptrend, smack in the middle of an ascending triangle. ETH is bullish above the 50 Day and 200 Day EMAs, and it's not until ETH falls below the $350 level that I start to question the trend. I wouldn't be surprised at all to see a bit of sideways trading next week around the $400 level, as Bitcoin will likely do the same around $13,000, and we are at that time of year where volume is high, volatility is high, news headlines are swirling about the US election, COVID spikes, and a potential stimulus bill being passed. This is a perfect storm for a volatile next month or so. That being said, I think that environment will cut daytraders at the knees, as most will be unable to take advantage of the chop. I'm a buyer on dips and at these levels, as ETH is still criminally underpriced.
Support: Look for support at the 50 Day EMA around $365 and then $350. I'm not convinced based on where ETH currently trades that $400 is support just yet. In order for me to consider that, I need to see an impulsive wave higher above $400 again, or a bit of sideways trading around the $400 level which holds. Below that, longer-term support should be found around $300 which is only a few bucks higher than the 200 Day EMA, which is rapidly closing the gap.
Resistance: If Ethereum hold onto $400 as support, we can look at $450 - $500 next which is the top of the ascending channel as drawn in the chart above and a round psychological number. Frankly, $400 is my inflection point where I perceive ETH in a bull market. An impulsive and tested move above $500 just punctuates that perspective until proven otherwise.
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