On Saturday morning Ethereum Classic (CRYPTO: ETC), along with apex cryptocurrency Bitcoin (CRYPTO: BTC) and the ever-popular Dogecoin (CRYPTO: DOGE), was consolidating Friday’s bullish trek north. All three cryptos have recently had a relative strength index (RSI) of over 70% which puts them into overbought conditions for technical traders.
A cryptocurrency, like a stock, always enters into a period of consolidation after either a large incline or decline. Ethereum Classic rose 137% between its June 22 low of $32.17 and its Aug. 15 high of $77.37. Although bulls would love to see the original Ethereum version ‘moon’ it will need to stop for gas along the way.
See Also: How to Buy Ethereum Classic
The Ethereum Classic Chart: On Aug. 7 Ethereum Classic broke up from a descending trendline that had been holding the crypto down since June 3. After busting up through the trendline Ethereum Classic soared about 46% over the course of nine days.
When the crypto reached its $77 high its relative strength index measured in at 79% which was a sell signal. The crypto then retraced about 22%, which cooled its RSI down to a much more comfortable 57%, before making another bullish move up.
In its consolidation Ethereum Classic has created another descending trendline which it has now rejected on four separate trading days. For technical traders a trendline must demonstrate support or rejection at least three times to be valid. Ethereum Classic rejected from its new trendline on Aug. 15, 16 and 20 and on Saturday morning the crypto tried to jump over it but failed.
As of 10:00 a.m. ET Ethereum Classic’s trading volume was about 143 million compared to its average 10-day volume of 547 million. When a crypto or stock trades down on low volume it is usually a bullish consolidation as opposed to a bear break.
Ethereum Classic is trading over the eight-day and 21-day exponential moving averages (EMAs) with the eight-day EMA trending above the 21-day, both of which are bullish indicators. On Saturday morning the crypto tested the eight-day as support and held above it. Ethereum Classic is also trading above the 200-day simple moving average indicating overall sentiment is bullish.
-
Bulls want to see big bullish volume come in and drive Ethereum Classic up over the descending trendline. If the crypto can clear the level it has resistance above at about $72 and $79.
-
Bears want to see big bearish volume come in and drop the crypto down below support at the eight-day EMA. If Ethereum Classic loses the support level it could fall toward $65. Below that there is support near the $57 mark.
etc_aug._21.png
Photo by: ETC on Flickr
See more from Benzinga
© 2021 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.