Ethereum Price Prediction: A Short Squeeze Could Push ETH Back to $2.8K Rapidly

Ethereum (ETH) has gone up by nearly 9% in the past week, as tensions in the Middle East have managed to keep cryptocurrencies above key levels.

The top altcoin is currently sitting above the $2,000 psychological threshold, following the United States decision to go to war with Iran.

The assassination of the country’s Supreme Leader, Ali Khamenei, tilted the scales in favor of cryptos, and trading volumes are responding accordingly.

In the past 24 hours alone, ETH trading volumes have jumped by 15% to $26 billion, currently accounting for nearly 11% of the token’s circulating market cap.

This is an important number that indicates strong buying pressure and a potential short squeeze in the making.

During this same period, as Iranian military targets were blown up, $250 million worth of short positions were too.

Short liquidations for ETH have surged past $50 million in the past 3 days, indicating the importance of the $2,000 for short sellers.

Key Level to Watch: Move to $2,150 Could Trigger Massive Rally

If we get a stronger move to around $2,150, this could trigger a much stronger wave of liquidations (short covering), which could add fuel to the rally and propel ETH above previous resistance levels.

We have been expecting a reversion to the mean in the daily chart for quite a few weeks, and this “Iran War” event could be the catalyst that pushes ETH back to its 200-day exponential moving average (EMA).

The price needs to first climb above $2,150 to pull off a short squeeze, as this would mean a bullish breakout above what has been a strong supply zone for the token for nearly a month now.

Today’s move has already encountered strong selling pressure at this level again, so we still need to see if buyers have the necessary ammo to pull this off.

The Relative Strength Index (RSI) is surfacing off oversold levels and has already moved above the 14-day moving average, which can be interpreted as an early buy signal.

Two Buy Signals Pop Up as ETH Bounces Off Key Supports

As we highlighted in our latest Ethereum price prediction, if we get past $2,150, the next stop would likely be $2,800, meaning a 40% upside potential from where we are now. Meanwhile, if bulls fail at keeping ETH above $2,000, then we might see the token drop to $1,800 in the near term again.

Heading to the hourly chart, we saw some strong support at $1,900 as a buy signal popped up right after the token hit this mark earlier today.

This is currently the market’s line in the sand. If the price breaks below that level, this rally should be over soon. In the meantime, we are in “buy” territory. This is the second signal we get for ETH on the bullish side after hitting a key support level.

The first one has already yielded a 2.35x risk-reward ratio (using the nearest low as the stop price), while the last one is still unfolding and has only yielded a 0.6x return.

In both cases, the target for these positions is $2,150, in which case the first one would feature a 3.2x RR ratio and the second one a 2.3x ratio.