The XRP has shown great weakness as the cryptocurrency is being sued by the SEC. Its price dropped significantly from $ 0.65 to $ 0.21 in four days, down 67%.
Meanwhile, other altcoins have also been corrected significantly in the past 24 hours, as investors are likely to fear that XRP may not be the only currency on the SEC’s radar.
Ether (ETH) fell 14% on December 24th and then jumped to $ 550. While Chainlink corrected 38% to a recent low of $ 8. The Sushiswap (SUSHI) saw the biggest correction and drop in the flash crash from $ 2.75 to $ 1.10 – down 61%.
So the question now is whether the XRP disaster will continue to hurt the altcoin market in the short term. Let’s take a look at the techniques to identify the current areas of support and resistance.
Ether seeks new higher low after recent fall
The weekly chart for Ether was great and has not changed during the recent drop-down list. In this sense, construction is still optimistic and with an upward trend.
The recent high of $ 675 confirms a new higher high, after which a higher low will guarantee the continuation of the bull market for Ether. This higher low is likely to happen in the area around $ 450. This is the previous resistance zone, eager to seek support before the continuation takes place.
However, to have this correction, Bitcoin (BTC) must see a severe correction. Otherwise, this scenario is unlikely to occur. As long as Ether remains above $ 450, a new high could push Ether to $ 1,200-1,300 next year.
$ 620 resistance is the next crucial level
Ether’s daily chart is looking less optimistic as it broke below the crucial $ 620 limit, which should have been broken for immediate bullish continuation. Exceeding $ 620 would practically guarantee a further rise in ETH’s price.
However, the previous resistance and rejection zone at $ 620 suggests that more downside is likely in the short term.
Therefore, the crucial support zone for Ether is now the $ 550 area, as this is the most recent low. As long as it holds up, the bullish case is still on the table.
The price will likely fall to the $ 450 region if $ 550 fails to support after another $ 620 rejection. This $ 450 level is the previous resistance zone and a significant support area in the weekly period.
Bitcoin dominance becoming parabolic
The weekly graph of the Bitcoin domain shows an advance towards 70%. The main reason for this rally is the weakness of the XRP, as it is the second largest altcoin.
The dominance chart will continue to rise if the XRP continues to plummet. At the same time, the ETH / BTC’s weakness is also not helping the case for another season in early 2021.
However, one thing to note is the maximum potential on the Bitcoin dominance chart, as it usually occurs in December. Since 2016, the dominance chart peaked in December. After this top, altcoins saw massive gains in the first quarter.
The ETH / BTC pair is the key here because it has to hit rock bottom before a potential altcoin rally.
Unfortunately, Ether’s weekly chart shows a clear break below support in the BTC pair, indicating that an additional weakness for altcoins is likely.
However, as long as ETH remains above 0.021 sats, bullish arguments can still be made for higher, as the upward build would still be intact.
Ideally for ETH, a recovery from the 0.026 sats level would indicate additional strength and continuation, so traders should look at that level first. If that doesn’t work, the next area to watch is the 0.021 sats zone next to the $ 450 region.
The views and opinions expressed here are exclusively those of author and do not necessarily reflect the views of Cointelegraph. Every investment and trading movement involves risk. You must conduct your own research when making a decision.