Outlook: Ethereum had a quiet Wednesday, dropping a bit initially before turning around, settling just below the $600 level to put in a slightly bullish hammer. Like Bitcoin, Ethereum seems to be in a bit of a topping pattern after a recent impulsive rally, and it looks like some sideways action that we haven't been graced much with lately appears to be on the way. Technically, I think Ethereum is in a slightly more bullish position right now than Bitcoin, as Ethereum remains lagged far behind Bitcoin in terms of the magnitude of the recent move up and the stretched ETH/BTC ratio which remains around 0.03 ETH/BTC. This is historically low, as Ethereum spends quite a bit of time between 0.02 and 0.05, but it's usually not until later in bull markets that we see asset rotations out of BTC and into ETH.
(December 2, 2020 8:30PM EST)
ETH has been and continues to trade in a pretty wide and well-defined ascending channel, with $600 being at the upper end of that range, so a pullback here makes sense. All ETH news has been positive and continues to be so, so I don't think there's any reason to fear a large drop to $400 or lower, breaking the channel's rising trendline. Similar to Bitcoin, I think the ETH chart could be pretty boring for the next few months, as there are no known significant catalysts as we wait for sharding and staking to take shape. That being said, I think we could see some sideways trading over the next few months as ETH digests the recent gains and consolidations a bit, which would provide an extended accumulation zone for what I portend to be an increasingly bullish 2021-2023 period.
Support: Look for support at $500, which is former resistance and a large, round psychological number, and a level of support as ETH just bounced off it following a nasty holiday weekend selloff. $500 should be pretty strong support, but below that I'll look for value underneath around $450 which is near the 50 Day EMA and ultimately $400, which should be ironclad support.
Resistance: $600 remains resistance as ETH has yet to break impulsively above it, making a few brief closes above before returning back below. If ETH can print an impulsive candle breaking above $600, then eyes will turn to $700, $800, then $1,000. I don't forsee any major bullish catalysts in the near-term, so I think $600 is our number to watch for now.
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