Ethereum [ETH] has surged in the past week, sparking optimism among investors and traders who believe it could signal the start of a much-needed positive trend.
But this optimism quickly faded as the price of Ethereum gradually retreated, failing to maintain the upward momentum. As a result, market activity around Ethereum became less exciting, with initial enthusiasm giving way to caution.
Ethereum price trend is sluggish
Analysis of Ethereum’s daily chart shows that the asset experienced a relatively quiet trend until a major spike on August 23. This spike caused the price of ETH to increase by more than 5%, from about $2,623 to about $2,764.
Source: TradingView
However, the momentum soon faded, and the following trading day saw a small drop of 0.59%. As of this writing, Ethereum is trading at around $2,747, down slightly by about 0.5%.
Analysis suggests that the bullish trend sparked by the initial surge has stalled as Ethereum’s price has failed to gain enough momentum to continue rising.
Relative Strength Index (RSI) analysis shows that it is currently hovering around the neutral line, indicating a lack of strong directional momentum in the market.
Furthermore, the short-term moving average (yellow line) remains a key resistance level around $2,900, a level that Ethereum has yet to break above. The long-term moving average (blue line) is positioned as the next significant resistance level, which is around $3,200.
Ethereum needs to overcome these resistance levels if it is to establish a sustained bullish trend. Until then, the price may still struggle to break out of the current range, with bullish momentum still hanging in the balance.
Ethereum is in a tough spot
Ethereum is currently having a hard time breaking through a key resistance level. Currently trading around $2,750, the digital asset is struggling at the 26-day exponential moving average. Ethereum’s difficulty in breaking through this level suggests that the market may consolidate further, or even reverse. Although Ethereum has recovered from its lows, recent price action suggests that it does not have enough momentum to break through $2,750 and approach the $3,000 mark. The current state of the Ethereum network is one of its fundamental problems. The network’s usage indicators show that even if the price recovers, it is far from full capacity. The lack of utilization may be a factor in the lack of purchasing power required to increase the price.
Ethereum liquidations decrease
A recent analysis of Ethereum’s liquidation trends over the past few days shows that there has been no clear liquidation trend for several weeks.
The only notable activity occurred on August 23, when the price of ETH rose by 5%. On that day, liquidations surged to about $50 million, with short positions particularly affected. Data shows that short liquidations exceeded $34 million.
Liquidations have been relatively low in recent days, suggesting that traders are being more cautious with their positions, likely due to the current market uncertainty.
Trend remains positive
One positive aspect for Ethereum is that market sentiment continues to be positive, as evidenced by its persistently positive funding rate. Analysis shows that Ethereum’s funding rate has remained above zero, indicating that buyers are still in the driver’s seat.
The positive funding rate suggests that long positions continue to dominate, with traders willing to pay a premium to maintain their long bets on Ethereum.
The dominance of long positions reflects market participants’ confidence in Ethereum’s potential for future price appreciation despite the recent lack of momentum and cautious behavior seen in liquidation trends.
In simple terms
Currently, ETH's moving average is still at a key resistance level. Technical indicators show that the bullish trend is not clear in the short term. I think the lack of momentum in the market in the short term is expected to go through a period of consolidation and accumulate momentum. In the long run, the dominance of bulls shows the confidence in the potential for ETH price appreciation, which will improve market sentiment. As the market recovers and stabilizes, the recovery of momentum is expected to enable ETH prices to break through resistance and test the $3,000 mark.
