A half-hearted party for Ethereum enthusiasts?- Now days away from The Merge, Ethereum is still trading below $1,900. After rising more than 130%, the price got pushed back to the weekly resistance level. Despite the recent fall in Bitcoin, Ether is showing strength and seems to want to regain value. The party could quickly be ruined if the price of Ethereum drops again. Can the price still rise after The Merge?
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Ether still bearish on a weekly basis
Despite the recent rise seen on Ethereum leading the asset to $2,000 (+130%), this asset remains bearish in weekly time units. A few days now from The Mergethe event could be sold by speculators, and it would not be graphically illogical.
Several elements show that the course is always bearish, and this, despite the major event that is coming:
- The course evolves under the weekly resistance : an area that must be regained by buyers to block sellers. If the bear market is still relevant, this area should be defended by sellers;
- the first stop (0.382 Fibonacci retracement): This level is crucial in a trend. In a downtrend, retracements at this level are usually sold;
- the institutional bias (EMA 9/EMA 18) is always bearish : two EMAs that have already pushed the price back to $2,000. Will they postpone the course again?
The level to recover for buyers is at $1,900. If this level is not regained before The Merge, beware of the famous “buy the rumour, sell the news” (“buy the rumor, sell the news”)! If the level is regained, it will be possible to see Ethereum again in shorts reload area (0.618-0.786 Fibonacci retracement) located between $2,500 and $3,000.
The momentum is hesitant at the level of bearish trendline. The RSI is trying to break out, and the rejection is unclear. There may be a signal emerging for buyers. This trendline has been pushing back the price since the beginning of May 2021. Exceeding it would therefore be a good omen.
Resistance at $1,900 for Ethereum
As explained in the first part, Ethereum remains bearish on a weekly basis and the price could quickly cope with the resistance at $1,900.
On a daily basis, the price is in bullish momentum and approaches resistance at $1,900. When we thought we had lost the first stop, buyers are hanging on. If this is maintained, the objective will be to make a new high. If the first stop is lost, the price could join the support at 1250 dollars which also corresponds to reloading area. For the moment, the price is moving above the bullish trendline, the buyers are taking advantage of the momentum.
A double top could take place on a daily basis if the price returns to the level of $1,900 and gets rejected. It will be necessary to be vigilant if the price hesitates at this level or in the event of bearish divergences at the RSI level.
Ether ready to explode against Bitcoin?
Against the dollar, theEther is enough brittle. We saw it in the first two parts. On the other hand, against Bitcoin, it is another matter.
Ethereum reacted well at the bottom of the range against Bitcoin. The chart of ETH/BTC is clearly not not in bear market. The bull market could even pick up quickly. It’s all going to play out in the days to come as price moves above resistance, but there may still be some rejection.
If ETH/BTC develops a bullish structure in contact with the resistance, the price will leave this range and the Ether will continue to outperform Bitcoin. On the other hand, if the price is violently rejected, goes back under the resistance, it will be a new DETOUR and the price may return to the bottom of the range. The price still remains undecided, but there is an element that goes in the direction of the scenario in green on the graph.
Momentum has broken the bearish trendline. Recently, the RSI has bounced back against it and it looks like the RSI is ready to go higher. If the RSI exceeds 74the momentum would confirm a return to the upside.
Speculators Bet Down on Ethereum
It is interesting to watch the behaviour actors on the derivatives markets. For this, we can look at theopen interest and at funding rate, for example. Open interest reflects the number of open positions. And the funding rate is a cost mechanism that allows the price of the derivative market to stick to the spot. This is Binance’s perpetual contract.
Several information emerge from this graph:
- the funding rate is negative : it has not been so negative since last summer after the fall of May 2021. The actors have a behavior of aggressive shorts before The Merge. The feeling seems to have changed;
- L’open interest increases by nearly 30% : since the funding rate is negative, many positions have been opened;
- the fall long/short ratio : the ratio returns to a correct level, but shows a behavioral change of actors since a few weeks.
The Merge being perceived as positive for the majority of players, it is amazing to see players aggressively shorting Ethereum a few days before the date. The actors are probably playing the “buy the rumour, sell the news”. However, if the price continues to rise, a squeeze shorts could happen and these players would find themselves liquidated. Whatever happens, the feeling seems to have changed and it remains positive for the future.
Ethereum is always bearish weekly against the dollar. The dollar still remains strong and, for the moment, it prevents risky assets from fully expressing themselves. Ethereum must retake the zone at $1,900 to avoid a new wave of decline. The ETH/BTC chart is, meanwhile, close to a range exit. It remains to be confirmed in the coming weeks. Ether has a shot to play against bitcoin, but we know it: Bitcoin remains the king. If Ethereum breaks out of its range, it will resume an upward trend against Bitcoin and this will allow it to regain value against the dollar. Altcoins could also benefit, since Ether is the leader among altcoins. The Merge allow a new wave of dropsor a squeeze shorts prepares ?
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