Ethereum rallied slightly on Monday, going back and forth during the trading session between $560 and $610, settling the day slightly positive with a bit of a Doji candle. This to me looks slightly bearish as Ethereum is struggling with resistance around the $600 level and getting rejected. Despite today's candle being green, it's a Doji which means 1) indication of possible reversal, and 2) not an impulsive bullish candle higher, which is what ETH needs to break $600. But more importantly, today marked a lower low on the chart, officially closing below $60 for the first time in a week. Similar to Bitcoin, I think ETH might be experiencing a bit of a local top here, though I think ETH still has plenty left in the tank given its lag behind Bitcoin's outsized Oct-Nov rally.
Outlook: Short-term, I think ETH's path of least resistance is down, but not tremendously - probably to the $500 level, which was supportive during the Thanksgiving selloff. From there, which I contend should be supportive again along with the rising 50 Day EMA, ETH is, in my mind, a rubber band stretched to the downside, with a little pressure being released every week. It's slowly returning to a normal state, which is markedly higher prices, but it hasn't 'snapped' yet. Rest assured, it almost certainly will, and when it does it will be a violent impulsive rally upward, probably to the $1,000 level, which at this point is a major and realistic target for 2021. I think ETH's undervalued and despite being near a local top, still great value in the medium-long term. I'm a buyer on dips, and DCA continues to work. 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 the immediate resistance, and I need an impulsive candle above it and holding it to prove a sustained rally. After that, $700, $800, and $1,000. After $1,000, ETH will probably start to trade similar to Bitcoin a few years ago where it starts moving in larger increments as investors inflows dwarf the market cap, causing rapid price discovery and causing euphoric jumps in price.
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