Ethereum drifted lower again on Friday, falling below the $550 level again during the day before turning around, settling the day at about the $550 level. This is, of course, a bearish close to a bearish week. I don't think $550 is particularly supportive, so a retracement down to at least $500 is a very strong possibility at this point. However, if you zoom out even a bit to the daily chart, shown below, or even longer-term, you can see how small of a retrace this is relative to Ethereum's price action since the summer, which tripled in price. I think this pullback will be shallower and less intense than Bitcoin's, and will serve as a great dip to buy.
ETH looks to have more downside on the daily chart here, likely targeting the $500 level with the 50 Day EMA just underneath. That seems to be a pretty proportionate pullback after a large rally but one that pales in comparison to Bitcoin's Oct-Nov run. From there, I think ETH should find significant support, rallying to a new local high and then grinding back up towards the $1,000 level.
With two traditional stock market Ethereum funds becoming available to the general public, I think ETH's downside here is both limited in price and in time; any pullbacks will likely be short-lived. If institutional inflows are even a fraction of what they have been to date for Grayscale's Bitcoin Trust, this should cause massive price inflation to Ethereum in the spot markets.
It appears ETH has given us a bit of direction to the downside - which we forecasted. If we can place some high-probability buy orders at significant levels, I think this would be a great opportunity to increase your ETH stack before a very bullish 2021. I liken 2020 ETH to late 2016 BTC - breaking out of an accumulation zone and forming the early stages of the next bull market.
Support: I'm looking for support around the $500 level, then $450, and ultimately $400, which is my line in the sand. The 50 Daily EMA is rapidly approaching $500, and the 200 Day EMA is approaching the $400 level, which should give further support to the long-term uptrend.
Resistance: $600 is immediate resistance until we get an impulsive candle above it and holding it, which I don't forsee for probably a few weeks, maybe not until 2021. After that, ETH will look toward $700, $800, and $1,000.
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