Ethereum Classic (CRYPTO: ETC) plummeted down almost 10% on Monday following Bitcoin (CRYPTO: BTC) and Ethereum (CRYPTO: ETH), which were trading down over 7% and 8%, respectively.
The crypto markets have also begun to trade in correlation with the overall markets this year due to Bitcoin and a number of altcoins being adopted by companies such as Square Inc (NYSE:SQ) and PayPal Holdings Inc (NASDAQ:PYPL).
The Ethereum Classic Chart: Ethereum Classic fell through a key level at the $50 mark which has both price history and psychological support. The dip down to $47.22 was bought, however, and Ethereum Classic bounced back north to regain support of the 200-day simple moving average.
The long lower wick demonstrates bulls bought the dip but the above-average volume on the decline shows there are more sellers than buyers.
By mid-afternoon on Monday Ethereum Classic had a trading volume of over 317,000 compared to the 10-day average of 216,950. Volume is a momentum indicator and bullish traders prefer to see lower prices on lower-than-average volume.
Ethereum Classic’s relative strength index (RSI) has reached 34%, which brought the crypto down toward overbought territory. When a stock or crypto’s RSI drops near or below 30% it is a buy signal for technical traders. The last time Ethereum Classic’s RSI dropped to 34% was on July 2, then its price shot up over 100% in the month that followed.
Ethereum Classic is trading below the eight-day and 21-day exponential moving averages (EMAs) with the eight-day EMA trending below the 21-day, both of which are bearish indicators. Bulls will want to see the crypto close the day above the 200-day SMA for confidence a bearish sentiment change isn’t in the cards.
- Bulls will also want to see consolidation and then for big bullish volume to come in and drive Ethereum Classic back up above the $50.93 level. If the crypto can regain the level as support it could head back up toward $55.
- Bears want to see sustained big bearish volume drop the crypto down below the 200-day SMA and for momentum to push Ethereum Classic down toward a descending trendline which has in play since June 1. If the crypto doesn’t respond bullishly to the trendline it could fall back toward the $40 level.