As it was for ETC traders in my previous analysis, a confirmation was needed. ETC prices were trending around important prices and all that was needed was a dip or a surge. Weeks before this dilemma, ETC buyers had pushed prices above major resistance lines as marked by May’s highs.
This was a 6 months resistance trend line and therefore that resultant surge and close above it by week ending December 3 was a big statement for buyers.
Besides the break above, it also coincided with a very important policy announcement by ETC founders: that of fixing supply of ETC tokens and introducing an aspect of deflation. Like we know deflation is important for long term holders and for reference, BTC can be a good example.
Now, as per break out strategies, a retest is necessary and last week’s candlestick looked to have completed that move because even after testing $21, ETC prices rebounded and ended up above $25 with higher highs in lower time frames.
However, if we had depended on stochastics for trend definition, then this week could have been a barbecue session for short trades.
From the chart, our first resistance level is $41. It has been retested before and it is likely that bulls might clear this level. Our ultimate buy target is at $65, the second Fibonacci extension level.
In the daily chart, there is a buy signal and after bouncing back from the obvious support at $25, ETC buyers want to recover their profits as they eye ball immediate resistance at $41 and ETC all time highs of around $47 as marked by December 18 highs.
As mentioned before, we only need buyers to clear and close above $41-the first weekly Fibonacci extension level before we shift our target to $65. This therefore means we look for buy opportunities only our entry chart. Plus, prices are above the middle BB. It will be ideal if prices are maintained above this level before the week ends.
The first thing we notice is that bullish break out on January 4 and suppose prices close below the break out level of $33, the next support level will be the middle BB and the previous resistance now support trend line at around $30. Conservatives should wait for a close above $38 to initiate longs and aim at $65.