August 31, 2023: Ethereum (ETH) performs well, but remains fragile

After suffering a drop of almost -10%, Ethereum came back to perform at over 5% at the start of the week. Let’s take a look at the prospects for ETH.

ETH situation

Ethereum’s latest fluctuations are similar to those of bitcoin. Indeed, since the crypto market’s last downturn, ETH has stabilized at around $1650. In our last Ethereum analysis, we stressed the importance of this level. ETH is now trading around $1700. The 61.8% Fibonacci retracement level (traced from the last bearish impulse) has not been breached. This is not reassuring. Ethereum is now forming a double top figure, theoretically preventing a bearish move. It is currently below the daily 50 and 200 moving averages. Beware, the latter are changing course dangerously, to the point of forming a Death Cross.

Tuesday’s bullish swallow or the oscillators suggesting the resumption of a bullish momentum may be more comforting factors.

The current technical analysis was produced in collaboration with Elie FT, investor and trader with a passion for the cryptocurrency market. Now a trainer at Family Trading, a community of thousands of own-account traders active since 2017. Here you’ll find Lives, educational content and mutual support around the financial markets in a warm, professional atmosphere.

Focus on derivatives

According to several data platforms, over $20 million in short positions were liquidated. This scenario has not had a negative impact on open interest. In fact, ethereum’s open interest on CryptoQuant rose by over $200 million.

Given the latest movements, most of this liquidity is in the Bulls’ camp.

However, it should be noted that August 30 saw a slight downturn in the indicator. This can be explained by small forced liquidations and may suggest potential profit-taking or position abandonment in an uncertain market context.

Ethereum price scenarios

The best bullish outlook for ETH would be a return above $1,800. In this case, we could envisage a return to $1,900, then to $2,000.

If Ethereum’s price fails to bounce off the $1,650 support, we could see it test $1,500. Unfortunately, if this level doesn’t hold, it could lead to the next support level around $1,430.

The Ethereum price is just above a fundamentally important level. That’s why it has every interest in gaining momentum. Despite this promising momentum, nothing is certain yet. It will therefore be important to observe the price’s reaction on the various identifiable levels to confirm or refute the various hypotheses made. Beware of potential “fake outs” and “market squeezes” on each of these situations. And remember that these scenarios are based solely on technical analysis. Cryptocurrency prices may evolve more or less rapidly, depending on other, more fundamental factors.