Altcoins led by Ethereum alongside other selected tokens like Solana, XRP, Chainlink, Cardano, and more have sustained gains since Bitcoin price broke out in early October, riding on optimism around the potential greenlighting of spot exchange-traded funds (ETFs) in the US.
Ethereum price bounced off support at $1,500 as investors and traders alike rushed to book positions ahead of what some have come to refer to as an early “Santa Claus rally.”
The fear of missing out (FOMC) coupled with rumors around the approval of BlackRock’s Bitcoin spot ETF kept the momentum surging behind Ethereum, which quickly gained ground above key levels, starting with the 50-day Exponential Moving Average (EMA) (red), the 100-day EMA (blue) and the 200-day EMA (purple).
Ethereum Price Prediction: Facing The First Litmus Test
The growing interest in Ethereum provided traders with scalping opportunities, allowing them to buy and sell on short timeframes, further creating liquidity that sustained the run-up above $1,800.
However, Ethereum snapped out of the uptrend late last week after trading October highs around $1,862. Traders started to lock in the gains as Ethereum price corrected below a stubborn multi-month falling trendline.
Following a few weeks of bullish action, Ethereum currently hovers at $1,794 while bulls fight to reclaim support/resistance at $1,800.
An immediate recovery seems like a pipe dream based on the prevailing technical outlook as shown by the Directional Moving Index (DMI). The uptrend was sustainable as long as the +DI line in blue was trending higher while the -DI persistently dropped.
However, with the +DI falling and the -DI starting to move up, chances of ETH immediately resuming the uptrend are slimming. Traders would be on the lookout for at least two key things.
First, Ethereum price must step above $1,800 to keep investors confident in the uptrend. The second would be to watch out for a continued decline — a move that may break down investor confidence in the uptrend and possibly trigger a sell-off.
The first major support lies at $1,740 where bulls will try to assert their influence on the trend if declines increase below $1,800. Below this level, we could be staring at a larger breakdown below $1,700, with areas at $1,665, $1,585, and $1,500 ready to serve as tentative support levels.
It is worth mentioning that a longer downtrend is unlikely, especially with more support expected from all three applied moving averages; the 50-day EMA, the 100-day EMA, and the 200-day EMA.
On the bright side, an immediate run-up above $1,800 would give bulls another chance to battle the falling trendline. Breaking above this level could signal the start of a prominent rally targeting highs above $2,000 and eventually the much-anticipated bull run.
Ethereum Open Interest Still Elevated
According to data by Coinglass, a platform tracking the crypto derivatives market, Ethereum’s open interest (OI) is growing consistently, reaching $5.88 billion after falling to $4.76 billion in August.
Open interest refers to the number of options or futures contracts held by traders in active positions. An increasing OI implies that new or additional capital is coming into the market.
Crypto trader @MacnBTC said via a post on Twitter (now X) that high funding rates on altcoins imply a local top signal. This means that the recent rally could have topped out and pullbacks are likely to occur.
Ironically high funding rates on alts = still a local top signal
in the bull market this does not apply, which tells me we are still in the very early phases of a run https://t.co/puq7M8KcPC
— Mac 🐺 (@MacnBTC) November 3, 2023
However, a pullback is not that obvious, and leaning on technical analysis might help traders make informed decisions.
The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.