Benzinga - Ethereum Classic (CRYPTO: ETC) was consolidating mostly sideways during Wednesday’s 24-hour trading session, trading generally within Tuesday’s range.
The sideways consolidation has been taking place since Saturday, after the crypto spent the period between Jan. 4 and Jan. 6 soaring 31.21% higher.
The sharp surge north paired with the sideways consolidation has settled Ethereum Classic into a possible bull flag pattern on the daily chart.
The bull flag pattern is created with a sharp rise higher forming the pole, which is then followed by a consolidation pattern that brings the stock lower between a channel with parallel lines or into a tightening triangle pattern.
For bearish traders, the "trend is your friend" (until it's not) and the stock may continue downward within the following channel for a short period of time. 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 of the flag formation, on high volume, for an entry. When a stock breaks up from a bull flag pattern, the measured move higher is equal to the length of the pole and should be added to the lowest price within the flag.
A bull flag is negated when a stock closes a trading day below the lower trendline of the flag pattern, or if the flag falls more than 50% down the length of the pole.
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The Ethereum Classic Chart: If Ethereum Classic eventually breaks up from the upper descending trendline of the flag formation, the measured move indicates the crypto could surge up toward the $25 mark. Bullish traders will want to see Ethereum Classic break up from the pattern on higher-than-average volume to indicate the pattern was recognized.
- Ethereum Classic is trading in a fairly consistent uptrend, with the most recent higher high formed on Monday at $21.81 and the most recent low printed at the $19.44 mark on Wednesday. If Ethereum Classic breaks up from the bull flag, traders will want to see the crypto promptly break above $22 for the uptrend to remain intact.
- The sideways consolidation has caused Ethereum Classic’s relative strength index (RSI) to come down slightly from about 67% to 62%. It could be beneficial for the crypto to remain trading in the flag for a few more days to lower the RSI further.
- Bearish traders want to see Ethereum Classic break down under Wednesday’s low-of-day, which will cause the crypto to negate the downtrend by falling under the eight-day exponential moving average.
- Ethereum Classic has resistance above at $20.46 and $24.58 and support below at $17.91 and $15.27.
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Photo: Courtesy of ETC on flickr.
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