After a week of hard-fought consolidation above $1,800, Ethereum (ETH) is facing a decisive sink-or-swim price move.
With Ethereum currently trading in a tightly-controlled range, price at the time of writing sits at $1,805 (a 24 hour change of -1.05%).
Steadfast support at this level provides confidence to bullish inclinations, with a re-test of local resistance from the MA20 ($1,856) quite possibly on the cards.
After 11 days of suppression from the MA20, this represents a critical level to flip to support if ETH is to resume upside momentum.
The MA200 remains far below price action, tracking Ethereum’s lower trendline since April 1.
Ethereum’s RSI remains cautiously oversold at 43 – indicating that it could be time to move up.
However, the RSI has failed to cool off sufficiently to lower levels around 30, which typically signifies a reverse in price action to the upside.
This could suggest that ETH needs to re-test lower support before resuming rally structure.
The MACD provides minimal clarification with only minor bearish divergence at -0.10.
Ethereum (ETH) On-Chain and Open Interest Analysis
To further clarify the direction of future price movements it is useful to take consideration of on-chain flows and open interest levels, which can help to identify potential sell-offs or accumulation periods for Ethereum.
Looking at Exchange Net Position Change (which depicts the 30D change in exchange supply) there appears to be a deepening accumulation window emerging over the past 12 days – as a brief period of exchange net inflow reversed on May 5.
With an overall image of a deepening accumulation window (as a 30D average change in exchange supply), it is worth taking a closer look at the day-to-day changes underpinning in and outflows.
Net Transfer Volume from/to Exchanges provides insight into the live netflow of Ether, this shows a clear continuation of this overarching accumulation window during the past 4 days which has seen a combined 75,914 ETH (worth $140m) moved out of exchange wallets into self-custody (suggesting ETH traders are stacking Ether in anticipation of upside price action).
This accumulation window can be explained by the recent downtick in price action, which has pushed more supply underwater – indicating a good time to buy.
When Ethereum pushes above $1,900 – Net Unrealized Profit Loss (NUPL – which measures the amount of ETH in profit) switches from ‘hope-fear’ to ‘optimism anxiety’ – denoting a critical level at which NetFlow commonly reverses.
With NUPL once again on the rise, it seems Ethereum could be headed for another run up to $1,900 – however, with Celsius Ethereum withdrawals stoking FUD in the market – uncertainty remains.
Despite this depiction of accumulation flows below $1,900, whales are still in a period of distribution – looking at Ethereum wallet addresses with a balance over 32> ETH (node operator requirement) there has been a steady decrease in addresses since March.
While this can be partially explained by the opening of withdrawals following the Shapella update, a decrease of 3,579 wallet addresses is still worrying.
As for Ethereum’s open interest levels there has been a steady increase throughout May, with levels currently sitting just above $6bn across all exchanges.
When Open Interest rises above $6.5bn there is typically enough incentive on the table for market makers to create volatile waves in the market, suggesting that if open interest continues to rise there could be a significant move in price action.
As for the balance of open interest, a glance at the Long vs Short ratio reveals that open interest is displaying minor bearish divergence at 1.0088 with a slim margin of 50.22% leaning taker buy.
Ethereum (ETH) Price Prediction
The state-of-play between on-chain data and open interest levels suggests two potential scenarios that could dominate Ethereum’s outlook on the short-time frame.
In the first scenario, On-Chain accumulation continues to deepen (driving price up the critical level around $1,900) – if this is matched with an uptick of Long Open Interest to 6.5bn then there could likely be a seismic move to the downside (flushing out long interest).
However, if Ethereum accumulation fails to push price higher to $1,900 then Open Interest is likely to stack up into taker sell positions – if this occurs and open interest rises above 6.5bn then there could likely be a significant move to the upside (flushing out short interest).
With this in mind, Ethereum’s upside target sits above the MA20 with a clean break above the $1,900 level to $1,915 (a possible +6.14% move).
However, downside risk could see price tumble to a lower support level at $1,750 (a potential -3% fall).
This leaves Ethereum (ETH) with a Risk: Reward ratio of 2.04 – a good entry for a long characterised by double reward to risk.
But it is worth observing Open Interest levels and the Long vs Short – along with the ETH accumulation window on-chain for more decisive positioning that could likely fuel a bigger move.
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