June 23, 2024

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This Could Fuel An Ethereum Rally Back To $1,700, Shorts Beware

2 min read
This Could Fuel An Ethereum Rally Back To ,700, Shorts Beware

Ethereum has almost made back the gains from previous weeks with yesterday’s upside move and could be gearing up for another push above resistance. The second cryptocurrency by market cap is following the general sentiment in the market and seeing some relief after the influence of macro forces lessened, for the time being.

At the time of writing, Ethereum (ETH) trades at $1,330 with a 9% profit in the last 24 hours and a 2% loss over the past week. In the crypto top 10, ETH is one of the best-performing assets along with Solana (SOL), and Bitcoin (BTC).

Will Ethereum Bulls Squeeze Out The Shorts?

Yesterday, the crypto market experienced high volatility against the backdrop of the U.S. Consumer Price Index (CPI) report, the benchmark for inflation in this country. The metric printed an 8.2% for September, beating expectations, and pushing Bitcoin and Ethereum below critical support.

After taking the liquidity to the downside, the market retraced back to the range that was chopping out short and long positions. According to a pseudonym trader, the volatility was unable to liquidate the sellers betting on further downside price action for Ethereum at its current levels.

These positions have been piling up for several weeks, pushing the Open Interest (OI) for Ethereum futures contracts to new highs. In the coming days, if bulls can sustain the bullish momentum, the liquidation of these shorts could provide the fuel for a rally into the $1,700 area where ETH’s price stood before “The Merge”. The pseudonym trader noted the following:

Despite today’s volatility and high amount of long liquidations, open interest is still quite elevated. Clearly there’s still a whole bunch of shorts open. The fact that they haven’t covered much at all at the range low indicates greed. They gotta close some time.

If Shorts Are Wiped Out, How High Can ETH Soar?

As mentioned, larger cryptocurrencies are back in the range in which they have been moving for over a month. Thus, the pseudonym trader believes Ethereum could break about local resistance at around $1,300 and push into the $1,400 area.

As seen in the chart below, yesterday’s downside price action was violent but short-lived. Something similar could happen to the upside if the short positions are liquidated.

In the meantime, with the low-volume weekend coming up, the crypto market could experience a re-test of lower levels before gathering momentum for a fresh rally. This could place Ethereum at the top of its channel, as seen in the chart below, at $1,400. The pseudonym trader added:

Considering that the entire CPI dump got fully retraced on such high volume I’m inclined to believe that we now commence our adventure back towards the top of the range. The 1200 area makes sense to long, doesn’t make sense to short, at least in my head.