Bitcoin

If Merge is a sell-the-news event, expect Ethereum price to reach 1,300

  • ethereum price movement on a twelve hour time frame indicates a bearish bias.
  • inventors can expect eth to trigger a sell-off at or below $1,280.
  • a twelve hour candle close above $1,957 will create a higher high and invalidate the bearish thesis.

the price of ethereum has been in a massive uptrend due to the upcoming software update of the underlying blockchain called a “merger”. this update will allow you to go from proof of work (pow) to proof of stake (pos).

The former consumes a lot of energy and is not environmentally friendly as a result, but the latter does not use mining devices and therefore reduces its carbon footprint by multiple folds.

Reading: Bitcoin crypto price prediction

Is the merger bullish?

Now that we have a basic understanding of what a merger is, let’s take a closer look at how it affects the blockchain and its users. the general population thinks that the merger will increase the speed of the transaction, reduce gas fees and triple the profits through participation, etc.

This expectation, coupled with the triple halving narrative, has caused the price of ethereum to soar despite being in a discernible bear market. eth, in particular, has more than doubled, having rallied 130% between June 18 and August 14.

However, the ethereum foundation published a blog, addressing these misconceptions clearly:

  • merger will not reduce gas fees
  • stake gains will not triple, but 50% possible
  • speed of transactions will remain as mostly same

Regardless, speculators have managed to trigger a wild rally in the price of ethereum. let’s look at the technicals and whether these gains are sustainable in a bear market.

ethereum price tries to recover

the price of ethereum has been on a downward trend since November 2021 and has fallen by 81% from $4,868 to $880 in just 220 days. After bottoming out on June 18 at $880, eth has risen 130% in less than two months to set a high of $2031.

After this impressive uptrend, the price of ethereum appears to have taken a massive hit, signaling the start of a second leg.

See also: Bitcoin: Time To Exit

ETH/USD 3-day chart

eth/usd 3-day chart

On the 12-hour chart, the price of ethereum reveals a change in narrative from bullish to bearish, as it fell by 25% between August 14 and 20. this move created a lower low at $1,524 from the August 10 low of $1,656.

This development shows that the bears are currently in control and the ongoing recovery bounce is just a failed attempt to the upside. the logical step is to prepare for the incoming downtrend and identify a perfect entry to open short positions.

the fair value gap (fvg), also known as price inefficiency, which extends from $1,726 to $1,823, is the ideal zone for entry, but a closer look reveals that $1,730 is a framework resistance level of high time. this confluence makes $1730 a perfect place to start building up short positions.

After a small rally to $1,730, market participants can expect a direct drop into the other imbalances, also known as fvgs at $1,471, $1,125 and the same lows at $996. however, due to the presence of a stable support level at $1280, market participants can expect the ethereum price to stop its downtrend here, making it a perfect place to hedge short positions. /p>

ETH/USDT 12-hour chart

eth/usdt 12 hour chart

multiply rewards with higher risk

However, a riskier play is to cover only 50% of the shorts and hold onto the rest to see if eth can produce a lower low relative to the June 18 low of $880. if successful, this development will signal that a more pronounced correction awaits the smart contract token.

In such a case, market participants may again accumulate short positions around the psychological level of $1000, with the expectation of a possible fall to $600.

See also: 10 Best No KYC Crypto Exchanges of 2022 | ZenLedger

From a macro perspective, the price of ethereum has created a volume gap, stretching from $960 to $383. the volume profile also shows that $755 and $591 could help absorb selling pressure and potentially allow for a macro base to form here.

thus, re-rolled short positions of approximately $1,200 to $1,000 can be hedged into $600 for a large profit.

ETH/USD 3-day chart

eth/usd 3-day chart

While the above thesis makes sense from a logical standpoint, the merger is a significant event from a historical perspective, and this shift from pow to pos signifies an inherent change in the ethereum blockchain like never before.

so, despite the data supporting a sell-off, hype could trigger a rally. If this move produces a higher high above the Aug 18 high of $1881, it will signal the first chink in the bears’ armor.

however, a 12 hour candle closing above $1957 will create a higher high and invalidate the bearish ethereum price thesis.

note

While the macro or high time frame outlook is bearish, the attached video below explains how to capitalize on the recovery rally taking place in a much shorter time frame.

See also: In a world first, El Salvador makes bitcoin legal tender | Reuters

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