Why Ethereum Classic Could Head Towards $100 If This Pattern Reigns Supreme

Classic Ethereum ETC/USD was trading around 5% lower on Sunday after falling lower from a quadruple inside bar pattern on the daily chart. The breakout occurred on below average volume, indicating that the inside bars may not be the dominant pattern.

Instead, Ethereum Classic could set a bullish flag pattern, and if the pattern is recognized, a massive upward move could be in the cards.

The bull flag pattern is created with a sharp rise forming the pole, which is then followed by a consolidation pattern that pulls the stock back lower between a channel with parallel lines.

  • For bearish traders, the “trend is your friend” (until it isn’t) and the stock may continue to fall into the next channel for a short time. Aggressive traders may decide to short the security at the upper trendline and exit the trade at the lower trendline.
  • Bullish traders will want to watch a break of the upper falling trendline of the flag formation, on high volume, for entry. When a security breaks out of a bull flag pattern, the measured upward movement is equal to the length of the pole and should be added to the lowest price in the flag.

A bull flag is canceled when a stock closes on 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 settles into a bull flag pattern, the movement measured during a break in the formation is a whopping 116%, indicating that the crypto could surge towards the $98 level. Traders and investors can watch for an upside break of the upper descending trendline of the flag formation on above average volume to indicate if the bull flag pattern is recognized.

  • The sideways consolidation within the flag pattern helped Ethereum Classic’s eight-day exponential moving average (EMA) catch up to the crypto’s price. Ethereum Classic may find support at the eight-day EMA, but if the crypto falls below the level, there is additional support at the 200-day simple moving average. If Ethereum Classic closed a 24-hour trading session below the 200-day SMA, it would most likely negate the bull flag pattern.
  • Sunday’s decline was due to well below average volume, which further confirms that the selloff is due to healthy consolidation as opposed to a mass exodus of sellers. As of early afternoon, crypto volume measured just 159,294 compared to the 10-day average of 832,082.
  • Ethereum Classic has resistance above $47.92 and $50.74 and support below at $44.66 and $41.41.

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See also: How to read candlestick charts for beginners

Photo: Courtesy of ETC on Flickr

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