Etherium Classic Analysis (ETH/USD) November 10, 2017

on Nov 9, 2017
Updated: Sep 19, 2019

After the launch 16 months ago, Ethereum classic-also known as ETC rallied from lows of $0.7 to $24 within 10 months. That was a 3330% surge just like BTC but took longer. Judging from the weekly chart, ETC topped with a bear candlestick which closed above the upper BB in Mid June 2017.

As it has been the case, any close above the upper or lower bands in this volatility indicator means a situation where an asset has been overpriced by the market. The default setting at 20,2 was meant to counter situations like those and with a 95% chance of all price action closing within the bands, that Mid June 2017 close was the 5% and as expected a necessary correction to reinstate equilibrium happened.

 Also notice that prior to ETC topping, there was a fake stochastics sell signal on the first week of May. The one year rally after that fake sell signal was accompanied by bear momentum meaning that the surge from $7 to $24 was driven nothing but by speculation resulting in a bear divergence. At current prices, ETC has lost 60% of its value and is now recovering at 38.2% Fibonacci level. There is also a stochastic buy signal in place complete with a Morning Star pattern.

Our trading strategy will be simple in the 4HR chart. ETC bullish momentum is high in the weekly chart and because of that we only enter long in the 4HR chart ONLY when there is a buy signal. This needs to be confirmed first by a bullish candlestick preferably at important support levels showed in the chart.

So, in the 4HR chart there is a buy signal in place but this is not turning from the oversold territory. In two days, price action has continued to correct from recent highs of $15. Since the short term support trend line and the 20 period MA were both broken on November 8, we anticipate further dips towards the 38.2% and 61.8% Fibonacci and support levels between $11 and $12. Until there is strong price reaction at any of those levels complete with a strong bullish candlestick and a stochastics buy signal turning from oversold territory, we remain on the sidelines.

Alternatively, since we already know the general trend to be bullish, bulls could place their buy stop above $15 just in case ETC continues to zig zag upwards. However, the first plan is a conservative approach and my preference.