Ethereum Classic (ETC) Remains Strong Above Key Support Levels
Ethereum Classic (ETC) is stalling a corrective move to the upside against Bitcoin (BTC) but the price remains strong above key support levels. The daily chart for ETC/BTC shows that the price has already broken out of a falling wedge and is now expected to rise towards the historical trend line resistance. This trend line resistance was only tested once last year which lead to an aggressive correction for Ethereum Classic (ETC). The price is now ready to test it once again but we have yet to see whether it will lead to another correction. This is because if the price were to go through with another correction it will have to form a lower low which means the ETC/BTC will have to break a very strong support at 9,685 satoshis. So far we have no reason to believe that is going to happen but it remains a possibility nevertheless.
Before we can speculate on whether the price would go up or down long term, let us analyze what has already happened. ETC/BTC ran into trend line resistance in August, 2018 and was forced to make a lower low and decline to a long term support. The price then rallied from that level but did not have the momentum to continue rallying so it entered a falling wedge. Next, we saw ETC/BTC break out of that falling wedge but it has yet to rally to the upside. One of two things is going to happen at this point. Either the price is going to retest the support line and end up breaking it to the downside which is very unlikely or the price is going to rise towards the historical trend line.
Considering the overall outlook of the cryptocurrency market, I think the probability of a move towards the trend line resistance is a lot higher than a retest of the previous support. That being said, there is a high probability that the price may retest the trend line resistance, face rejection and fall back towards the previous support. Even then, we do not believe that the price may breach such a critical support unless it is prepared to enter a long term bear market. However, the odds of a break below the support would be significantly higher after a rejection at the trend line resistance.
When so many clues are pointing to the same outcome, it is hard to ignore them. As much as we want to believe that this is not the bottom and the price may fall further to new lows, there is a strong probability that ETC/USD has already bottomed. The price has found a new trend line support as seen on the weekly chart. This trend line support has been tested more than thrice so far and it has held strong. If we look at the bullish gartley pattern on the ETC/USD weekly chart, we can also see that the price has bottomed in the same manner that it had topped in.
In late 2016 when ETC/USD began its rally, we saw a strong move to the upside followed by a correction which was then followed by a more aggressive rally. Similarly when the correction started in early 2018, we saw an aggressive correction to the downside followed by a correction to the upside and then a correction to the downside to complete the bullish gartley pattern. Both sides of this pattern are now almost mirror images of one another. Now, one might argue that the price could fall further from current levels but the odds of a move to the upside far outweigh the odds of a move below the trend line support.