Ethereum Classic (CRYPTO: ETC) was falling about over 6% lower on Tuesday, in sympathy with Bitcoin (CRYPTO: BTC) and Ethereum (CRYPTO: ETH), which were sliding over 3% and 4%, respectively.
The cryptocurrency sector has recently tied itself to the general markets again, often trading in tandem with the S&P 500, which has been turbulent at best over much of 2022, frustrating day traders and investors alike. Geopolitical events such as the Russia/Ukraine crisis and rising interest rates have added bearish pressure to the indexes as many weigh whether the U.S. is headed into a potential recession.
Since March 23, Ethereum Classic has lost 41% of the 110% move to the upside that the crypto made between March 16 and March 22. In its decline, Ethereum Classic has developed a descending channel pattern on the daily chart, making lower lows and lower highs between two parallel trendlines. 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 or cypto 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 an upward break from the upper descending trendline, on high volume, for an entry. When a stock or crypto 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 has been trading in a consistent downtrend within the falling channel, with the most recent lower high printed on April 14 at $39.13 and the most recent confirmed lower low formed at the $34.28 mark on April 21. Eventually Ethereum Classic will have to bounce up, to at least print another consecutive lower high, which may provide bearish traders with a solid entry point.
- On Tuesday, Ethereum Classic was also settling into an inside bar pattern on the daily chart, with all of the price action taking place within Monday’s range. The inside bar leans bearish in this case because the crypto was trading lower before printing the pattern, but traders can watch for a break up or down from Monday’s mother bar on higher-than-average volume to gauge future direction.
- Ethereum Classic’s relative strength index (RSI) has been trending downward and is measuring in at about the 33% level. When a stock or crypto’s RSI nears or falls to the 30% level, it becomes oversold, which could indicate a bounce is coming soon as bulls come in to buy the dip.
- Ethereum has resistance above at $32.17 and $35.28 and support below at $27.67 and $24.58.
See Also: Why Bitcoin (BTC), Dogecoin (DOGE) Are Rebounding Today
Photo: Courtesy of ETC on Flickr
