Benzinga - Ethereum Classic (CRYPTO: ETC) plunged almost 8% lower at one point during Wednesday’s trading session after initially attempting to break above Tuesday’s high-of-day.
The sharp decline came in tandem with the broader cypto sector, which reacted negatively to the S&P 500, which attempted to regain a long-term descending trendline as support but failed.
Traders are watching for signs of whether the S&P 500 recently regaining the 200-day simple moving average, which occurred on Jan. 13, is an indication of a new bull cycle or if it's another bull trap.
Since Jan. 4, 2022, the S&P 500 has regained the 200-day SMA on a few occasions but has been unable to hold above the level. The start of big-tech earnings, which will kick off when Netflix reports its results on Thursday, could help the market begin to choose a longer-term direction.
Unlike the S&P 500, Bitcoin (CRYPTO: BTC) and Ethereum (CRYPTO: ETH), Ethereum Classic hasn’t yet regained the 200-day SMA, which means the crypto is in a bear cycle. When Ethereum Classic fell to the low-of-day on Wednesday, however, it didn’t negate its current uptrend with a lower low.
This indicates the uptrend is intact and if the trend continues, Ethereum Classic could rise up to test the 200-day SMA as resistance over the coming days.
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The Ethereum Classic Chart: Ethereum Classic’s most recent higher high within its uptrend was printed on Saturday at $23.91 and the most recent confirmed higher low was formed at the $19.44 level on Jan. 11. If Ethereum continues to trend lower on Thursday, bullish traders will want to see the crypto print a bullish reversal candlestick, such as a doji or hammer candlestick above $20.
- If Ethereum starts to recover on Thursday, bullish traders will want to see the crypto pop up above $24 to confirm the uptrend is intact. Another scenario is that Ethereum Classic may trade sideways and print an inside bar ahead of Netflix’s earnings.
- Wednesday’s pullback caused Ethereum Classic’s relative strength index (RSI) to drop from overbought territory (over 70) to about 59. This indicates that if Ethereum Classic starts trading higher, it has room to move without immediately entering into overbought conditions.
- Ethereum Classic has resistance above at $24.58 and $27.68 and support below at $20.46 and $17.91.
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