To the moon? – Cryptocurrencies have been on the rise for more than a month, Ethereum records six consecutive candles in the green on a weekly basis. As a reminder, Ethereum had chained eleven bearish candles from the beginning of April. While the final update of The Merge should arrive on September 15, Ethereum take the opportunity to regain value. Are the actors buying the rumor to sell the news? Was it a simple correction in a downtrend? Let’s look at the clues left by the charts.
This analysis of the Ethereum price is brought to you in collaboration with the Coin Trading and its algorithmic trading solution finally accessible to individuals.
It was mentioned in particular in This articleEthereum is at the time of writing at the level of the resistance at $1,900. You will have to break it to hope for a pleasant end of the year 2022:
The level at about $1,000 allowed a rebound of nearly 120%. A rebound almost in a straight line, but with a change in dynamics with this “W bottom”. Be careful though, the price broke a very important level at $1,900 at the end of May 2022. Buyers of these levels can exit their position at break even (at the level of their entry into position, without loss) and are then potential sellers. Concretely, it seems likely that the price will get stuck at this level.
If you missed the train, avoid FOMO on levels of resistance. The last few months have been very complicated for the cryptocurrencies, it is not impossible to be in a correction in a bearmarket.
In case the buyers manage to break the resistance on a weekly basis, the next resistance is around $2,500 at the level of bearish trendline. Then we have the last resistor at $3,900. First, the price must break the resistance at $1,900 to return to the tidy Between $1,900 and $3,900.
The momentum may be breaking the bearish trenline on the RSI. If so, it would be a strong signal for the market. Indeed, this trendline was initiated in November 2021 and the RSI blocked against it twice.
Ethereum heading towards $2,400
The resistance to $1,700 was crossed, the buyers succeeded in making the sellers yield:
We see it, Ethereum consolidated around $1,700 before crossing the resistance on a daily basis. In the future, this area can be used as support. Now the bulls target is the next resistance at around $2,400. This one is a dual resistancebecause there is also the bearish trendline who can reject the course.
The momentum shows some signs of weakness which can be quickly discarded. For this, it is necessary to avoid validating the potential bearish divergence in case of closing under 54 of RSI.
Ethereum breaks resistance against Bitcoin!
Ethereum is very solid right now. After rejoining the tidy against the BitcoinEthereum even offers itself the luxury of a resistance break :
Ethereum got a scare slipping below support in early June 2022. We can tell now, it was a bear trap. Today, Ethereum outperforms Bitcoin and it could continue if the exit from the range is validated. For this, it will be necessary to confirm the fact that the resistance is now a support for the price of this pair. A few weeks from The Mergeit would be exceptional to get out of this range in which the price has been stuck for more than a year.
The momentum, for its part, already confirms the exit from the range by extricating itself from the bearish trendline. It’s a clear signal positive for lovers of the eternal second capitalization.
Actors Speculate Ethereum Ahead of The Merge: Good or Bad News?
Ethereum surpasses Bitcoin in terms of volume in the derivatives markets
In July, Ethereum has overtaken Bitcoin in terms of volume :
Bitcoin and Ethereum are the two largest capitalizations. It seems logical that they dominate in terms of trading volumes in the derivatives markets. On the other hand, Ethereum overtook Bitcoin as can be seen on the chart. The speculation is present as can be seen in this graph:
Volume is on the rise again after a break of a few months. This is most likely due to announcements regarding The Merge update. The actors are probably playing the famous “buy the rumour, sell the news”.
However, is this good news? The actors are speculate and the market likes to take players on the wrong foot. For this, we can be interested in funding ratewhich allows to know the behaviour actors. Are the players buying (long) or selling (short) oriented?
The behavior of players in derivatives markets
the funding rate represents the costs paid by the actors. When the funding is negative, the shorts pay a fee and when the funding is positive, the longs pay. This system allows the price of derivatives to stay close to the spot price (where you actually own the asset). The funding rate is interesting to analyze, because it helps to better understand the behaviour actors.
In September and November 2021, we see that the funding rate was very high. Currently, the funding is positivebut it remains at one correct level. There doesn’t seem to be a lot of buying speculation in the derivatives markets, and that’s reassuring.
L’open interest (which summarizes the open positions on derivatives markets) is raised. While the price is much lower than November 2021, the open interest is higher than on that same date. It is interesting to note that open interest has drastically fall (-25%) when Ethereum exceeded $1,250. There were most likely aggressive actors in shorts during the fall of Ethereum.
The long/short ratio shows that, despite the rebound, the players are not massively oriented towards buying on the derivatives markets. Again, it’s positive for subsequent events.
Ethereum is now at significant resistance. After a very complicated start to the year, the end of the year could turn to the advantage of buyers. For this, we must re-enter the range between $1,900 and $3,900 on a weekly basis. Speculation is crucial and it is likely to continue before the event The Merge scheduled for September 15. Players are not FOMOing today, but that could quickly change if prices continue to rise. So, “buy the rumour, sell the news”? See you on September 15.
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