Ethereum Price Prediction: Confirmed Bear Trap Sets Stage for Strong Rally to $2.8K

Ethereum (ETH) has booked a 13% gain in the past 30 days, and is once again toying with a bullish breakout above a key resistance that could set off a strong rally.

The top altcoin managed to recover from yesterday’s strong drop, closing the day with a 0.2% gain after losing nearly 2.5% at some point during the session.

As a result, ETH is now hovering above the $2,150 threshold – a key resistance we have been keeping an eye on as a break above it could catapult the token to at least $2,800 in the mid-term.

Despite this recovery, Ethereum exchange-traded funds (ETFs) have booked 5 consecutive days of net outflows, with $291 million being withdrawn from these vehicles as market sentiment remains shaky.

The Fear and Greed Index continues to recover, currently sitting at 36, which means it is almost out of “Fear” territory. However, the latest drops emphasize that there’s still enough selling pressure built up at higher levels to trigger strong reversals whenever these relief rallies hit key levels.

We have been emphasizing the importance of the $2,150 threshold as short liquidations have spiked every time the price crosses this mark.

Short Squeeze Odds Remain High as Liquidations Spike Above $150M Again

In the past 24 hours, liquidations have increased beyond $150 million, even though we are only $30 above this level right now. We expect that liquidations will accelerate dramatically if ETH manages to cross above $2,200.

The potential for a short squeeze is huge, based on these early indications. The daily chart shows that the next target for ETH in case of a strong uptick above this key resistance would be the $2,800 level, meaning a 30% upside potential.

The Relative Strength Index (RSI) is currently standing at 54. This is not yet an indication of rising bullish momentum, as we need a move above 60 to get a more conclusive “buy” signal. However, the oscillator did hit that mark in the past few days.

We are looking at fairly good odds that the market reverses its latest downtrend and a strong relief rally begins. This does not mean that this bear market is fully over, as that would depend on ETH crossing some other price thresholds, like the $3,000 level.

However, it could be an early signal that this bearish cycle is coming to an end, which could result in short-term consolidation between $2,150 and $2,800.

Confirmed Bear Trap Sets Stage for Explosive Move to $2,375 for a 4x Trade

Heading down to the hourly chart, we got a “buy” signal from our system that indicates strong whale participation after the latest big drop.

As we emphasized recently, this move had all the characteristics of a bear trap. These are “fakeouts” that aim to create liquidity by trapping short sellers during what seems like a trend reversal at first glance.

If the price of the asset reverses and rises, these short positions provide the fuel for an explosive upward move as stop orders are triggered once ETH rises beyond $2,200 or higher.

Hence, if the American session supports this early rally, this could set off Ethereum’s next big move to $2,375 first. This opens up an interesting opportunity for a long position that currently offers a 4x risk-reward ratio if the entry is set at $2,150.