Following a 12% rally on January 6, Ethereum Classic [ETC] traded in the $19.95 – $21.77 range. Since January 7, ETC has been trading in the above range.
ETC was trading at $20.52 at press time and could retest the upper range boundary of $21.77 if demand picks up. The CPI data, on the other hand, will be crucial in this case.
The CPI in the United States is commonly used to gauge inflation rates in the United States, and speculators were betting on a further decline in the same.
The upper range boundary of $21.77: Is a retest likely?
The Relative Strength Index (RSI) overstayed in the overbought zone before it moved sideways. This showed that buying pressure dropped slightly, but bullish momentum was relatively strong.
In addition, the Money Flow Index (MFI) rebounded from the midrange and showed that a significant distribution had taken place.
Therefore, ETC bulls could attempt to retest the overhead resistance at $21.77 and go beyond, primarily if BTC aims at the $20K psychological mark.
However, a break below $19.55 support would invalidate the bullish forecast. Such a move could see bears settle at the 61.8% Fib level of $19.09 or 100-period EMA of $18.76.
ETC’s mining hashrate recorded an uptick while open interest declined
According to Messari, ETC’s mining hash rates declined steadily from mid-December 2022 and bottomed out at the end of December. Afterward, it registered an uptick but has yet to reach the mid-December levels.
Hashrate influences prices directly; thus, a massive drop or increase will lead to price rallies or drops, respectively. ETC’s declining hashrate from mid-Decemeber correlated with ETC’s price decline.
At press time, there was an uptick in hashrate that could positively affect ETC price if the rise continues.
On the other hand, ETC’s open interest (OI) rate declined further as the coin moved sideways. It shows more flowed out of the futures market as ETC traders closed or liquidated their positions as ETC traded in a range.
The hidden OI/price divergence could tip ETC for trend reversal. However, BTC’s price action could give investors more clarity on the next movement.