Ethereum fell on Wednesday, selling off alongside traditional markets, gold, and Bitcoin, dropping below the critical $400 level and closing the day around $388. We are in the eye of the storm and a bearish engulfing candle is not an ideal start to a high-volatile season.
(October 28, 2020 8:00 PM EST)
Outlook: Ethereum fell today, shedding $20 and printing a bearish engulfing candle. The past few Daily candles hinted a pullback was coming, as I have been looking for a pullback to test new support, which looks like we'll see. You'll notice Bitcoin's chart looks a lot more bullish than ETH's; and that's the way it usually is; Bitcoin leads, alts follow later, ETH included. I will say, though, that ETH has solidified itself as the #2 large-cap crypto and usually leads other alts as well. However, ETH will have its day, and probably not very long from now, but for now ETH needs to show some support as rampant selling and volatility enters the markets. I do believe that cryptos such as BTC and ETH will hold up better than other asset classes during this period of market turbulence, meaning corresponding selling, but to a lesser degree. After all, BTC and ETH tend to trade with almost 0 correlation with equities markets outside of liquidity events. The problem is we may be rapidly approaching a liquidity event: COVID second wave/Countries re-shutting down/US Election/No stimulus package.
Support: Look for support at the 50 Day EMA around $368 and then $350. As mentioned previously, I need to see an impulsive wave higher above $400 again to be able to call it support. That didn't happen, so ETH pulled back, and now I'm looking for a bounce off support to reattempt $400. Longer-term support should be found around $300 which is only a few bucks higher than the 200 Day EMA, which is nearby.
Resistance: $400 is my near-term resistance until ETH breaks decisively above it. Once ETH breaks through $400, we'll then look for confirmation of support and then look higher to $450 and $500. Given the volatility in markets and bearish tone, ETH may see further weakness as collateral damage.