Ethereum surged to a high of $2,667 on Friday, September 11. Just four days later, ETH experienced an 11.6% retracement, returning to a value of $2,356. At this time, Ethereum was trading at $2,495 and was once again approaching the $2,530 local resistance zone. Wednesday’s rate hike decision has prompted investors to pause and reevaluate their bullish conviction. Further rate hikes to combat inflation would signify a period of tightening liquidity in the market, thereby increasing the likelihood of risk-on market losses. The spot Ethereum ETF flows have decelerated in recent days.
Farside Investors’ data indicates that the last three trading days experienced a total of $407.3 million in outflows, reflecting a short-term bearish trend. In a recent post on X, Santiment noted a significant decline in Ethereum transaction costs. Soft mainnet demand has contributed to a reduction in costs, while the price has seen a significant recovery during July and August. Lower utility costs and trends in price recovery create a more favourable landscape for Ethereum projects. Reviving participation alongside reduced execution costs may indicate a positive outlook for the network.
The 1-day chart indicated the potential for a bullish trend. The April high at $2,466 was surpassed, although the momentum has decelerated since that point. Nevertheless, the breach of the previous swing high indicated a clear intention from the bulls. The daily chart has exhibited a bullish reversal, while the weekly chart also reflects a bullish trend. The Fibonacci retracement levels (orange) were derived from the weekly structure. A recovery above the 78.6% level at $2,147 in August was an encouraging sign. The 2,380-2,530 range (purple) continued to hold. At the time of writing, the upper limits of the range were poised to face significant pressure.
The MACD exhibited a bullish crossover beneath the zero line, indicating that momentum was starting to transition toward a bullish trajectory. The OBV remained significantly lower than the peaks observed in the previous week, indicating a lack of robust buying volume amid the recent price rebound. Overall, ETH swing traders should exercise caution regarding a bullish breakout, given the history of previous unsuccessful attempts. Meanwhile, a dip below 2,380 would open the door for a bearish move. Whether that move also proves to be a significant liquidity hunt remains to be seen. Risk management will remain crucial in navigating this range in trading.
