Ethereum (ETH), along with Bitcoin (BTC), took a massive tumble yesterday after a classic fakeout-dump precluded a possible break from the MTF downtrend. However, the ETH/Bitcoin chart is holding up pretty well with strong resilience, and we may see Ethereum start outperforming Bitcoin in this extended downtrend.
We start on the daily ETH/Bitcoin chart, and see that yesterday’s blistering selloff saw a very strong counter-rally off of the .382 Fibonacci retracement level (red line). But given the tenor of the market, we may have to see another leg down on this chart in order to find a bottom.
However, if Ethereum can maintain above the very critical ‘capitulation line’ at ₿0.0233, we can still maintain a quite bullish long term outlook for ETH in 2020.
On the weekly ETH/Bitcoin chart, we see that ETH is holding in an important support from late-2018/2019. It took a very long term and many battles to break this support level to the downside, and hopefully having regained it, ETH bulls won’t let it slip without an equally intense fight.
We also notice that, despite the brutal weekend, the EMAs are still contracting bullish and that the histogram really doesn’t look bad at all, with a nearly plateauing profile.
ETH/Dollar has, of course, taken a considerably worse hit as it is more tied with Bitcoin’s dollar price. Ethereum has carved clean through the 55 EMA and is not likely to regain it soon, and will likely need to find a solid base of support and consolidation.
We see the $186 area is a likely bottom for price around here, being the location of a significant inflection level and of the ‘golden pocket’ retracement zone. If we do see another aftershock-type selloff, this is a decent buy target.
So there are some reasons here to be optimistic on Ethereum. It has been heavily outperforming Bitcoin lately, and is coping pretty well with the weekend’s intense market violence. Sitting in Ethereum rather than Bitcoin might prove to be a wise move in the coming months.
The views and opinions expressed here do not reflect those of CryptoGlobe.com and do not constitute financial advice. Always do your own research.
Featured Image Credit: Photo via Pixabay.com
