Ethereum Classic Plummets Within This Pattern, Provides Opportunity For Bulls And Bears: How To Trade It

Ethereum Classic ETC/USD plunged over 12% at one point on Wednesday, as an overreaction to Bitcoin BTC/USD and Ethereum ETH/USD, which were declining about 3.5% and 5%, respectively.

After surging up 115% between March 14 and March 22, Ethereum Classic entered into a consolidation pattern within a downtrend between two parallel lines, which has set the crypto in a falling channel pattern on the daily chart. The pattern is bearish for the short term but can be bullish down the road.

• For bearish traders, the "trend is your friend" (until it's not) and the stock is likely to continue downwards. Aggressive traders may decide to short the stock at the upper trendline and exit the trade at the lower trendline.
• Bullish traders will want to watch for a break up from the upper descending trendline, on high volume, for an entry. When a stock breaks up from a descending channel, it's a powerful reversal signal and indicates a rally is likely in the cards.

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The Ethereum Classic Chart: Ethereum Classic entered into a downtrend on March 23 and has since made a consistent series of lower highs and lower lows, with the most recent lower high printed on Monday at the $48.63 mark and the most recent lower low formed on Wednesday at the low-of-day.

• When Ethereum Classic hit the low-of-day at the $39 level, it dropped to the lower descending trendline of the falling channel, where the crypto ran into a group of buyers and wicked up from the level, which further indicates the pattern is being recognized.
• If the crypto closes the 24-hour trading session near its low-of-day price, Ethereum Classic will print a bearish Marubozu candlestick, which often indicates lower prices will follow but because Wednesday’s sell-off was large, the most likely scenario is for an inside bar to develop in consolidation.
• If the crypto continues to hold the lower trendline as support, it’s likely Ethereum Classic will eventually bounce up to test the upper trendline again as resistance.
• Bullish traders would like to see the crypto regain the 200-day simple moving average as support to indicate long-term sentiment remains bullish. If Ethereum Classic closes the trading session below the 200-day, it could fall bearishly through the falling channel.
• Ethereum Classic has resistance above at $41.41 and $44.66 and support below at $38.95 and $35.38.

Photo: ETC on Flickr