Ethereum sold off on Thursday, falling further below the $600 level and even breaching below the $500 level before finding support, eventually closing the daily candle around $520. This is an extremely bearish candle as Ethereum dropped over 10% on the day, giving back about $100 over the past two trading sessions and even piercing below the $500 level briefly, indicating there may be more pain yet to come.
(November 27, 2020 7:30PM EST)
Outlook: Ethereum sold off on Thursday, shedding nearly $100 during thinly traded markets amid the US Thanksgiving holiday, and even falling below $500 briefly before finding support to close the day just above the $500 level. This is a strong bearish candle, wiping out a bullish impulsive move last week and falling back within the longer-term ascending channel. In the grand scheme of things, these days happen and are not the end of days. By multiple measures, ETH was overextended to the upside and corrected during a seasonal liquidity drought in traditional markets and lower global volume during a major US holiday. I think this is a short-term pullback that eventually puts in a higher low, probably around the $450 - $500 level, providing further support for a subsequent leg up probably in Q1 2021. Depending on the severity and length of this market weakness, we could see sideways action for a few weeks or even a couple months before another sustained bullish rally like just concluded. Take advantage of this opportunity and DCA at lower levels to accumulate, picking up value for your longer-term stack.
As we saw briefly today, a pullback to $500 and I expect value-hunters to come in, as I think ETH is way underpriced and, in the medium-term, anything below $1,000 is a steal. I think the days are numbered where ETH is less than $1,000, let alone less than $600, which at this point, may be far and few between.
ETH 2.0's deposit contract reached and even exceeded its 524,000 ETH staked threshold and is set to launch on its originally intended date in early December, which is bullish for ETH as a rough timeline for staking yields comes closer to being a reality.
Support: Look for support at $500, which is former resistance and a large, round psychological number. Below that, $450, the 50 Day EMA at $433 and rising, and $400, which should provide ironclad support.
Resistance: $600 is solidified as short-term support, as ETH only churned there for a few days before getting rejected hard. It might not be until the new year when ETH makes another attempt at breaching $600, but when it does, look for increases in increments of $100 until $1,000, then it's a different ballgame.
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