Can Ethereum Classic recover from this strong support level?

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In the last few days, there has been a lot of action in the worldwide cryptocurrency market. During Bitcoin’s surge above $40,000 and subsequent dip to around $35,000 levels, most cryptocurrencies oscillated between critical support and resistance levels. Ethereum Classic, on the other hand, was on the other end of the spectrum, as the alt maintained its steady drop on the charts despite bigger market signals.

At the time of writing, Ethereum Classic was trading at $52, down 3.8 percent in the previous 24 hours, with a market cap of slightly more than $6 billion.

 

 

Ethereum Classic daily chart

Source: ETC/USD, TradingView

When the price was denied a break above the $82-resistance level, the daily chart of ETC showed the formation of a descending channel. At the time of publication, the focus was on two support lines that might cause an upward breakout from the pattern. The first level was $51, which was just below ETC’s press time price. The other defensive line was at the swing low of $40 on May 19th.

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Reasoning

The Awesome Oscillator detected a sequence of green bars, indicating a bullish divergence from ETC’s southward price movement. While the MACD did trade below the half-line, its histogram has shown a reduction in general negative momentum since the end of May. The Relative Strength Index confirmed ETC’s movement, but was yet to fully hit bearish territory at the time of writing.

Given the erratic nature of ETC’s indications, predicting its movement in the next days is challenging. However, there were signals of recovery, indicating that the price of ETC would not go below the solid support zone of $51-40. Once selling pressure is relieved, these areas may also drive a breakthrough from ETC’s down channel, triggering a rise towards $74-84 and the 50-SMA (yellow)

Conclusion

The downward channel of ETC moved closer to the strong protective zone between $40 and $51. Its signs did point to a rebound, and a slide below the aforementioned zone appeared improbable. In the event of a breakout, gains would most certainly be restricted to the $74-84 resistance zone.

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