Outlook: Ethereum fell alongside Bitcoin today, breaking down through the $600 level yet again to close the day and week with a bearish candle. Typically a bearish close into the weekend has negative implications for Monday morning, but that was disproven in dramatic fashion last weekend when crypto sold off into the long US holiday weekend, only to explode up to new highs the following Monday. I think that was a bit news-driven, which appears to be running out of steam. Just looking at the chart, you can see a grind higher followed by a sequential retrace. Additionally, you can see the $600 level causing quite a bit of resistance, rejecting Ethereum for what appears to be the third. Usually, three rejections on the daily chart is enough to warrant a sustained pullback, so I think, barring any rocket ship rally repeats like this past Monday, ETH may fall down to test the $500 level, or possibly lower.
(December 4, 2020 7:30PM EST)
I think a pullback to at least $500 makes a ton of sense, as acted as local support and a higher low last weekend, which then provided support for a strong bounce. Usually, the top of a former resistance range becomes a new support level, so $500 would apply here. Granted $500 holds, and even if it doesn't, I don't think ETH goes that much lower, I think ETH's downside is very limited. Higher highs, higher lows, rising EMA's, ~1 million staked ETH locked up indefinitely, thus reducing and preventing selling pressure, increased bullishness towards crypto in general, institutional investors making initial entries into the ecosystem, and massive Quantitative Easing by major world governments inflating the price of fixed assets just doesn't give a ton of opportunity for significant or even sustained price depreciation. In any case, dips are a buying opportunity, and I will be looking to buy value at lower levels, which looks to be possibly coming in the near-term.
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 just under the 50 Day EMA around $470, and ultimately $400, which should be ironclad support.
Resistance: $600 resiliently held on as resistance, rejecting ETH again despite a minor period breaking above the large round price level. If ETH can print an impulsive candle breaking above $600, then eyes will turn to $700, $800, then $1,000. I don't foresee any major bullish catalysts in the near-term, so I think $600 is our number to watch for now.
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