Ethereum Classic ETC/USD was soaring up about 26% over the past 24-hours in reaction to a bullish quadruple bottom pattern created at the $25.25 level that Benzinga called out March 15.
The crypto was moving inverse to Bitcoin BTC/USD and Ethereum ETH/USD, which were trading down over 2% and 3%, respectively on Sunday.
One possible fundamental reason for the massive spike could be that cryptocurrency miners are making a switch to Ethereum Classic in advance of Ethereum completing its transition to a proof-of-stake protocol, which is expected to take place by the end of the second quarter of 2022. Ethereum Classic has vowed to remain a proof-of-work crypto due to its belief that the protocol offers maximum decentralization and the highest level of security.
The Ethereum Classic Chart: When Ethereum Classic reacted bullishly to the quadruple bottom pattern on March 16, the crypto reversed course into an uptrend. The uptrend was confirmed on March 18 when Ethereum Classic printed a higher low at the $26.52 level and again on Saturday and Sunday when the crypto formed higher highs above the most recent high of $27.65, which was created on March 16.
Ethereum Classic will eventually print another higher low in the uptrend, which may offer bullish traders who are not already in a position a solid entry point. It’s likely the higher low will print within the coming days, because the crypto’s relative strength index (RSI) is registering in at the 76% level. When a stock or crypto’s RSI reaches or exceeds the 70% mark, it becomes overbought, which can be a sell signal for technical traders.
A massive amount of volume has returned into Ethereum Classic, which indicates there is a high level of trader and investor interest in the crypto. By early afternoon on Sunday, Ethereum Classic’s volume was measuring in at over 918,000 compared to the 10-day average of 214,779.
Ethereum Classic is trading above the eight-day and 21-day exponential moving averages (EMAs), with the eight-day EMA trending above the 21-day, both of which are bullish indicators. The crypto is also trading above the 50-day simple moving average (SMA), which indicates longer-term sentiment has turned bullish. It should be noted that Ethereum Classic is extended from all three moving averages, which indicates a pullback is likely to take place soon.
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- Bulls want to see eventual sideways consolidation in the form of an inside bar pattern or for some selling pressure to come in and cause the crypto to print a higher low before big bullish volume comes in and drives Ethereum Classic up over the 200-day SMA. If Ethereum Classic can regain the 200-day SMA as support and continue to trade above the level for a period of time, the 50-day SMA will cross above the 200-day, which will form a bullish golden cross. The crypto has resistance above at $38.95 and $41.41.
- Bears want to see Ethereum Classic reject the 200-day SMA and then for big bearish volume to come in and drop the crypto down below the eight-day EMA, which could signal the weekend move higher was a bull trap. Bears looking for a short-term trade could choose to enter into a scalp when the crypto prints a bearish reversal candlestick such as a doji or inverted hammer pattern on lower timeframes. Ethereum Classic has support below at $35.38 and $32.17.
Photo: Courtesy of ETC on Flickr
© 2022 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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