Ethereum has almost recouped the gains of the previous weeks with yesterday’s bullish move and could be gearing up for another push above resistance. The second cryptocurrency by market capitalization is following the general sentiment in the market and experiencing some relief after the influence of macro forces has subsided, for the time being.

At time of writing, Ethereum (ETH) is trading at $1330 with a 9% gain over the last 24 hours and a 2% loss over the last week. In the crypto top 10, ETH is one of the best performing assets along with Solana (SOL) and Bitcoin (BTC).

ETH price is moving sideways on the 4-hour chart. Source: ETHUSDT Tradingview

Will Ethereum Bulls Squeeze The Shorts?

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

After driving liquidity lower, the market pulled back into the range that was trimming short and long positions. According to a pseudonymous trader, the volatility failed to liquidate sellers who were betting on further downward price action for Ethereum at its current levels.

These positions have been building up for several weeks, driving open interest (OI) for Ethereum futures contracts to new highs. In the coming days, if the bulls can maintain the bullish momentum, the liquidation of these shorts could provide the fuel for a rally into the $1,700 area where ETH price was before “The Merge”. The Pseudonym Trader indicated monitoring:

Despite the current volatility and the large number of long liquidations, the open interest is still quite high. Clearly, there are still plenty of open shorts. The fact that they have not covered much in the low range indicates greed. They have to close at some point.

If shorts are removed, how high can ETH soar?

As mentioned, the largest cryptocurrencies are back in the range that they have been trading in for over a month. Therefore, the pseudonymous trader believes that Ethereum could break the local resistance around $1,300 and move towards the $1,400 area.

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

Meanwhile, with the low volume weekend approaching, the crypto market could experience a retest of lower levels before gathering momentum for a further rally. This could put Ethereum at the top of its channel, as seen on the chart below, at $1,400. The pseudonymous trader added:

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

Can ETH price get back to the top of this channel? Source: Byzantine General
(@ByzGeneral) via Twitter

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