The past of Ethereum says it all: Is ETH ready for a massive rally?
Ethereum is showing signs of a rebound, with technical patterns indicating a potential breakout.
A symmetrical triangle and an upward trendline indicate a potential bullish reversal for Ethereum.
- The leverage ratio of Ethereum and open interest reflects key trends that may soon impact price movements.
Ethereum (ETH) has closely mirrored overall market dynamics and recently experienced a significant price jump. Following Bitcoin’s (BTC) movement, Ethereum gradually recovered after a week-long decline that saw the asset drop 7.2%, bringing its price below $2,400.
As of this writing, ETH has managed to reclaim some ground, trading at $2,451 with an average increase of 1.1% over the past 24 hours.
Amid this price recovery, a well-known cryptocurrency analyst, Trader Tardigrade, recently shared insights on Ethereum’s price chart. This analyst noted that ETH has been following an upward trendline since June 2022, showing a consistent pattern.
Is Ethereum Set to Rebound?
According to this analyst, each time Ethereum approaches this trendline, it forms what is known as a symmetrical triangle before making a bullish leap.
Current market activity indicates the formation of another symmetrical triangle just above this trendline, hinting at a potential imminent rebound for Ethereum. Tardigrade’s analysis suggests that ETH is approaching a crucial support zone, with this triangle formation potentially providing the momentum needed for a bullish breakout in the coming days.
Source: Trader Tardigrade on X
In technical analysis, an upward trendline is a straight line drawn to connect at least two or more price lows. This indicates an upward movement where each low is higher than the previous one, reflecting a bullish market trend over time.
On the other hand, a symmetrical triangle is a chart pattern characterized by converging trendlines, indicating a consolidation period before a breakout. This pattern typically forms when the market is indecisive, but it usually results in a breakout in either direction after the consolidation phase ends.
The recurring emergence of these symmetrical triangles in Ethereum’s price chart, combined with its position above the upward trendline, suggests a potential bullish breakout on the horizon.
Fundamental Outlook for ETH
Beyond technical indicators, Ethereum’s fundamental metrics also provide valuable insights into its potential trajectory. According to CryptoQuant data, the estimated leverage ratio of Ethereum has been increasing over the past month, currently standing at 0.361.
This ratio represents the amount of leverage traders are using, calculated as open interest divided by exchange reserves.
Source: CryptoQuant
An increase in this ratio indicates that more leverage is being applied, often signaling higher expectations for price volatility. While this can lead to greater profits if prices move in the expected direction, it also raises the risk of liquidation if the price moves unfavorably.
To further assess the health of the Ethereum market, examining its open interest reveals differing indicators. Open interest, which represents the total number of active derivatives contracts, has experienced a slight decrease of 0.21%, now valued at $11.38 billion, according to Coinglass.
However, Ethereum’s open interest volume has increased by 120%, currently valued at $18.38 billion.
Source: Coinglass
This divergence indicates that while the number of open contracts has decreased, trading volume and activity surrounding these contracts have significantly intensified.
A decrease in open interest can signal a phase of reduced speculative activity, often occurring when traders close their positions to avoid increased market uncertainty.
In contrast, the rise in volume may suggest that traders are actively engaged in the market and potentially positioning themselves for a major price movement of Ethereum ahead.
This combination of declining speculative positions but increased volume activity indicates that market participants are consolidating their positions, likely awaiting a more decisive price action in the near future.
