Ethereum hovers just above $1800- should traders short ETH?

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

• A bounce in ETH prices searching for liquidity near $1850 was a possibility.
• The lack of volatility meant traders looking to enter the market can wait for more favorable conditions

Ethereum [ETH] was trading at $1832 at press time and has been in a lower timeframe downtrend since 17 July. The bulls were unable to defend the $1900 support zone and did not put up much of a fight in the weeks since then.

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The range formation appeared to have broken down, but ETH clung tenaciously onto the $1825 level. Will the bulls succumb soon, or was this price action signaling that a bullish reversal was building strength?

Despite the bearish structure, the sellers can’t make much headway

On 1 August, Ethereum prices charged higher on considerable volume on the lower timeframe charts but were unable to push beyond the lower high at $1877. It was followed by a reversal and these short-term gains were completely wiped out.

This highlighted a liquidity hunt on 1 August from just beneath the range lows.

In the week since, liquidity has likely built up just above the $1850 level, as it offered a clear lower timeframe invalidation for the bears. Therefore, an ETH move to the $1850-$1870 region in search of liquidity was possible. It would likely be followed by a swift bearish reversal.

The OBV showed that neither the buyers nor the sellers were dominant since 17 July, but the price action has been in a downtrend. The RSI also showed bearish momentum and had the upper hand in recent weeks.

Data from Monday revealed heavy selling pressure when ETH slid toward $1800

On Monday, 7 August, Ethereum fell from $1836 to $1808. In those few hours, the Open Interest saw a quick surge higher. This was indicative of short positions being opened en masse. When the price bounced back to the $1830 mark the OI began to climb lower.

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How much are 1, 10, or 100 ETH worth today?

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The spot CVD was flat in the past 12 hours but had trended downward in the past week. Together, the indicators showed strong short-term bearish sentiment. The rebound from $1802 does not show bullish strength but could have been fueled by short covering.

To the south, the $1750-$1770 demand zone could attract the price to it. Ethereum left behind a fair value gap on the H4 chart in that region. Moreover, it served as support in late March and throughout April.