Ethereum Price News: Bear Trap Could Push ETH Back to $2,400

Ethereum (ETH) has gone up by nearly 9% in the past 24 hours, surpassing the $1,800 barrier once again as the crypto market is reacting positively to the U.S.-Iran pre-deal.

The Strait of Hormuz is expected to reopen after the two countries signed an agreement to end the war after four months.

Many details about the deal are yet to be discussed, but this is an important step to reduce geopolitical turmoil.

The market is reacting positively to the news, and oil prices have dropped sharply to $80 per barrel as a result.

We see this as a key moment for the crypto market, as the end of the Iran war could be the catalyst needed for our weekly buy signal to play out as expected.

Short Squeeze Intensifies as Ethereum Breaks Past $1,800

The timing is just impeccable, and, in Ethereum’s case, today’s rally could mean that the price action has consummated a bear trap that could be followed by a strong short squeeze.

Data from CoinGlass shows that over $450 million worth of short positions in the crypto market have been blown up as a result of today’s spike.

Ethereum currently accounts for more than a third of that total, hitting the same level as Bitcoin due to the technical relevance of the $1,800 threshold.

Trading volumes further confirm this, as they have jumped by 160% in the past 24 hours to $15 billion. This figure accounts for nearly 7% of the asset’s circulating market cap.

Weekly Buy Signal is Now Favored by This Latest Macro Catalyst

We have been keeping track of a historical buy signal in the weekly chart that, for Ethereum, has delivered a 100% win ratio over the past 8 years. However, for the first time during this lengthy period, the price action broke below the pattern’s previous low.

This initially invalidated our bullish thesis, but today’s news could put it back in play. We needed something to push ETH back to its 200-day exponential moving average (EMA), and the end of the Iran war could be it.

Market sentiment should improve after this, lower oil prices should change the narrative concerning interest rate decisions in the following months, and this could inject some much-needed confidence in the market at a point when ETH just flashed this buy signal.

The last three times that the Relative Strength Index (RSI) dropped to 30, ETH bottomed and started to recover strongly. We anticipate a rally to $3,000 if ETH rises past its 200-day EMA, and a subsequent move above $5,000 in the long term if the rally unfolds to its full potential.

We would love to see the RSI rising past the signal line once again to confirm that bullish momentum is picking up its pace.

Now, heading to the daily chart, we can see that ETH has been rallying for three days in a row, although today’s move has been the strongest one since the token found support at $1,600. The daily RSI is coming out of oversold levels, which increased the odds of a technical bounce.

Even though today’s strong uptick could be interpreted as a dead-cat bounce, we see it as something more in the context of a weekly buy signal and a major catalyst like the end of the war with Iran.