ETH shows signs of short-term gains but it could be a risky punt for the bulls

Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion.

• Ethereum presented the possibility of another move to Monday’s high
• It was unclear if the bullish conviction was strong enough in the lower timeframes to drive a 3% bounce

Ethereum [ETH] saw a hike in its supply that took it to the highest it has been in the past ten months. The implication of an increased net issuance was a price decline. Additionally, the falling gas fee and declining on-chain activity meant ETH would likely face heightened sell pressure.

Read Ethereum’s [ETH] Price Prediction 2023-24

On 13 October, AMBCrypto reported that Ethereum had a pocket of liquidity in the $1595-$1616 region. This area was breached briefly on Monday (16 October) morning following Bitcoin’s volatility. What can traders plan for next, with a higher timeframe resistance zone overhead?

The move past $1600 showed that there could be some more gas in the tank for bulls to utilize

Source: ETH/USDT on TradingView

On the one-hour chart, ETH showed a strong bullish outlook. Its market structure was bullish and has been so since 13 October when it climbed above $1555. The former near-term resistance zone from $1585-$1600 has been shifted to a support zone. The Relative Strength Index (RSI) was above neutral 50 and highlighted buyers were more dominant.

However, the On-Balance Volume (OBV) has been in a firm downtrend over the past week. This was a discouraging finding for the buyers. It reflected the higher timeframe bias of ETH. The daily and 12-hour charts reflected bears were dominant. The range (orange) was one that ETH has traded within since late August. Moreover, the $1630-$1750 was a resistance zone from mid-June.

Hence, buyers can look to enter long positions at the $1585-$1600 zone targeting the mid-range mark at $1640. A tight stop-loss at the $1566-$1573 area can be considered as this trade could be extra risky. Bitcoin [BTC] sat at the $28.5k resistance at press time and could have a large influence on ETH.

The sharp decline in OI meant speculator confidence was severely shaken

Source: Coinalyze

Monday’s New York session saw wild volatility on the back of Cointelegraph’s inaccurate tweet regarding the Blackrock Bitcoin ETF, one that they have already apologized

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The fall in OI was followed by a bounce as bullish speculators entered the market but didn’t reflect strong conviction. However, the continued ascent of the spot Cumulative Volume Delta (CVD) was a positive development in the past 12 hours. This supported the idea that ETH could climb to $1640 or higher before floundering at the HTF resistance above $1660.