Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion.
- Ethereum has a bearish market structure on the lower timeframes.
- Short sellers looking for a drop below $1600 could fall into a near-term bear trap in the event of a bounce toward the $1650 region.
Ethereum [ETH] saw a dip in prices on 10 September in the wake of Vitalik Buterin’s account being compromised. The price action of the altcoin has lacked a clear trend over the past month, although it did have bouts of heightened volatility on a handful of days.
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Ethereum bulls have put up a fight at the $1600-$1650 region but have not regained any of the territory they lost in previous months. This was concerning. Bitcoin [BTC] was also trading in a long-term support zone, but a drop below $24.8k could accelerate losses for ETH.
The lack of volatility saw ETH establish a short-term range
Source: ETH/USDT on TradingView
In September, ETH traded between $1602-$1670. It has a level of technical importance at $1626 (dotted orange). To the south, the $1550 and $1370 are the next high timeframe support levels to watch out for. While they may not halt a strong downtrend, they were places where the probability of a reversal was high.
Hence, traders and investors will be interested in these locations on the price chart. The lower timeframe charts, such as the 4-hour and lower, showed strong bearish momentum behind Ethereum. Moreover, the OBV highlighted selling pressure began to take control on 9 September and could undo whatever small gains the bulls made last week.
A drop below $1600 could be a liquidity hunt and could result in a short-term bounce toward $1650 again, which could fool short-sellers waiting for a clean breakdown. Scalp traders can benefit from these conditions, but risk-averse market participants can also wait for better opportunities.
The weighted sentiment drops into the negative zone as price action remains bearish
Source: Santiment
Santiment data showed a spike in the age consumed metric earlier this month but remained quiet since then. This suggested that a flurry of selling activity from large, long-term holders was not seen in the past few days.
Realistic or not, here’s ETH’s market cap in BTC’s terms
Market sentiment was negative, and the mean coin age was in decline. Together they highlighted the bearishness in the market and that ETH was likely not in an accumulation phase.
The exchange flow balance saw a large outflow of ETH on 23 August, but not many notable outflows since then.