Disclaimer: The results of the following analysis are the sole opinion of the author and should not be taken as investment advice.
- Ethereum loses PoC, a retest of $1327 as resistance is brewing
- Could the retest end in a short squeeze with a surge to $1400 or can the bears hold?
Ethereum saw a sharp rejection from the range highs near $1400 a few days ago. Combined with the sharp decline Bitcoin experienced, Ethereum also developed a bearish structure on the lower time frame.
The merger took place in mid-September, but the price has been losing ground since then. Transaction fees have come down, although that could be due to both reduced interest in the NFT domain and the merger.
Assessing whether the point of control can reject Ethereum bulls
Source: TradingView
The price charts showed a range developing between $1400 and $1240. The volume profile of the visible area showed that the high and low range of values were at these levels, respectively. The point of control was $1327 and it presented a strong resistance level.
Additionally, the $1300-$1340 zone represented a previous support zone that has been retested as resistance at the time of writing. The swing highs and lows that formed last week (yellow area) also align closely with the VPVR results. Therefore, a rejection from the mid-range would likely see ETH revisit the $1240 lows.
The RSI was below the neutral 50 level and a hidden bearish divergence appeared as the price made a lower high while the RSI made a higher high.
This could signal a continuation of the short-term downtrend. The A/D line has been moving higher for the past few hours to show some buying pressure. However, the CMF has yet to see any significant cash flow into the market.
Network growth spikes, long-short ratio skewed bearish
Source: Santiment
Some of the on-chain metrics have skyrocketed over the past two weeks. The metric of daily active addresses rose sharply around the time of the merger. Network growth for Ethereum has also skyrocketed over the past few days. But was approaching a peak he hadn’t been able to cross since May.
Source: coin jar
The long-short ratio of the last 24 hours was interesting for Ethereum as it showed that the short positions were at an advantage. Ethereum futures markets remained positioned heavily bearish as measured by the negative funding rates of the past seven days.
ETH price action indicated that $1340 was a strong resistance and another leg down was likely. An hourly session close above $1340 could see the short-term bias reverse and a potential short squeeze develop.
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