Ethereum Classic [ETC] sends cautionary signals as its price grows by over 25%

Ethereum Classic [ETC] sends cautionary signals as its price grows by over 25%

Ethereum Classic [ETC] had a strong week, gaining 28.60%, according to data from CoinMarketCap. This made it one of the best-performing cryptocurrencies, along with Lido [LDO], which saw its price surge by 55%, and Solana [SOL], which saw a 35% increase over the same period.

Is a retracement in sight for Ethereum Classic?

An examination of ETC’s performance on a daily chart revealed that a price increase was possible, as the asset was trading at overbought levels at the time of publication.

First, as of this writing, its Money Flow Index (MFI) was at 88. ETC’s Relative Strength Index (RSI) was at 63.79 in an uptrend, following the same path. These positions suggested that ETC had become overbought. 

Buyer exhaustion is common at this point as new demand for the asset falls, leaving buyers in the market unable to sustain a further rally. This frequently leads to the bears regaining control and initiating a price decline.

In addition, an evaluation of ETC’s Bollinger Bands (BB) indicated that the altcoin was highly volatile at press time. Although the ETC price broke above the indicator’s upper band, indicating a continuation of the uptrend, the width between the upper and lower bands widened. This indicated high volatility. When a crypto asset’s price is highly volatile, it is susceptible to significant price fluctuations in a short period of time. This can make holding or trading the asset riskier.

Interestingly, a look at ETC’s average directional index (ADX) (yellow) showed that buyer strength was very strong and that sellers would find it impossible to reverse anytime soon. This is because it was positioned above the positive directional indicator (+DI) (green) and negative directional indicator (-DI) (red) that make up the direction movement index (DMI).

ETCUSDT 2023 01 07 09 38 31 Forks Daily

Caution is advised

Despite the recent price increase in ETC, weighted sentiment has been negative since the beginning of the year. This meant that, despite ETC’s consistent growth since the beginning of the year, investors still held negative convictions. A price drop is frequently preceded by negative sentiment.

Ethereum Classic ETC 09.52.25 07 Jan 2023 Forks Daily

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