Disclaimer: The findings of the following analysis are the sole opinions of the writer and should not be taken as investment advice
The past few hours have seen Bitcoin tumble from $52k to trade at $49.7k, at the time of writing, a decline of around 4.5%. The altcoin market also took a strong hit as selling pressure climbed.
Ethereum Classic shed nearly 5.5% of its value in the same period of time. In fact, it seemed likely that ETC would be forced to revisit the $33.4-lows.
The bounce from $28.12 to $41.9 in early December was used to plot the Fibonacci retracement levels (yellow). The 38.2% retracement level at $36.64 acted as support at the time of writing, but this defense could be tenuous if selling intensifies in the coming hours.
In mid-December too, ETC slipped under $36.64 and quickly fell all the way to $33.4.
Ethereum Classic was once more rejected at the 23.6% level, the $38.6-mark. The Visible Range Volume Profile showed that the price was inside the value area. The Point of Control (POC) lay at $35.75.
The rejection at $38.6 likely means ETC can drop as low as $33 in the coming weeks.
Bullish momentum has stalled. A bearish divergence (white) was seen as the price made higher highs but momentum (RSI) made lower highs.
The RSI fell swiftly below the neutral 50-zone. It was at 38.15 and falling, at the time of writing. The 36.45-mark has seen the RSI bounce somewhat over the past month, and is an area to watch on the RSI 4-hour chart.
The RSI was able to climb as high as 70 but no farther, and the candlesticks pictured upper wicks that meant buyers tried and failed to push the price past the $38.6-mark.
Another thing to note here is that the $38-region was an area of importance, not only due to the Fibonacci level there. In June and July earlier this year, Ethereum Classic tested the $38-$39 area for demand before embarking on strong rallies to $62 and $75, respectively.
On higher timeframes, this area is hugely significant. Another rejection in this area will mean sellers remain strong.
Bitcoin’s direction will be crucial for Ethereum Classic in the days to come. However, Bitcoin itself faces a lot of resistance until the $54k area, as does ETC in the $38-$39 area.
Hence, for ETC, $38 is an area to sell at, and $33.4-$33.8 is an area to look for buys.