Ethereum Classic (ETC) is a brilliant cryptocurrency with very bright future prospects. However, short term the price might be due for significant further downside. The bearish pennant seen on the daily chart for ETC/USD shows that we might see the price drop to as low as $1 before a trend reversal can begin. A lot of people might want to accumulate Ethereum Classic (ETC) at $1 but I assure you only the select few a.k.a the whales might be able to pull this off and the price will be close to where it fell from without their buy orders being filled. That is a short to medium term scenario which will see a lot of other developments factor in between. However, for now we have two strong factors that need to be discussed regarding the future outlook of Ethereum Classic (ETC).
First of all, we have the price trading in a large bearish pennant. Now, how is this bearish pennant and not a bullish pennant? Well, the price was falling before it got stuck inside the pennant which slowed it down to cool things off before the next decline. Now, that we have established that this is indeed a bearish pennant, let us observe what it implies and how to be prepared for that. If we look at the ETC/USD chart, the price faced a strong rejection at the top of the pennant and is now coming down towards the bottom of this pennant. Judging by the Stochastic RSI, we may not be able to drop below this pennant in one go and there might be a move to the upside first.
Chart for ETC/ETH (1D)
This potential move to the upside brings us to our second point which actually goes in favor of the bulls and that is the potential golden cross. When the price rises towards the top of the pennant, it will increase the odds of the 50 day moving average crossing above the 200 day moving average to form the golden cross. This would convince the bulls to push harder and we expect that the price might end up breaking above the bearish pennant and result in a fake out. In other words, we expect that both the bearish and bullish scenarios will play out. So, if both of these events happen, who benefits?
The whales benefit from it all and here is how. When the price rises towards the top of the bearish pennant, a lot of retail bears will open short positions which will be liquidated by the whales to tilt the balance in favor of the bulls. Once the bulls see the price above the bearish pennant, they will open long positions to profit off the most anticipated golden cross. This is where the whales would pull the plugs and hit stops of these overexcited bulls which will result in the price falling back within the bearish pennant with neither the retail bulls nor the bears onboard as the whales accumulate their coins.