Key Takeaways:
- Ethereum (ETH) jumped 45% in 6 days.
- The rally is not likely to last, given bearish technicals.
- Meanwhile, the Merge is getting closer, which could boost ETH despite the technicals.
YEREVAN (CoinChapter.com) – Ethereum native token Ether (ETH) advanced over 45% in the previous six days, constituting the largest bullish move since March 2022. As a result, the second-largest crypto traded at $1,480 in the European session on July 18.
Notably, the rally could halt in the upcoming sessions due to bearish technicals and the market’s overall unfavorable climate.
ETH technicals don’t favor the bulls
Before the breakout on July 16, Ethereum token charted within a formation dubbed the Bear Flag. The latter features a period of consolidation within a channel that takes the price slightly higher before taking another leg down, equal to the sharp bearish move (flagpole) preceding the setup.
Ethereum defied the formation by breaking the resistance and retesting it as support the next day. However, it might be too early to dismiss the Flag and its repercussions, as the trading volumes on the daily chart declined since the breakout.
In detail, a trading volume decline indicates growing passivity among traders. Moreover, the relative Strength Index (RSI; purple graph at the bottom) charted close to the ‘overbought’ territory, signaling a looming reversal.
Also read: ETH/BTC: Ethereum Could Surge Vs Bitcoin If It Clears This Barrier.
Additionally, given the recession fears, and the growing inflation, it is unlikely that Ethereum can pull off a solo rally, despite approaching the long-awaited Merge.
Declined network activity
Meanwhile, Ethereum network earnings and activity have declined more than the price. Andrew Kang, a member of Pleasr DAO, tweeted Ethereum’s price vs. earnings (P/E) ratio on July 17.
At peak, Ethereum traded at 33x PE, it now trades at 123x PE If ETH traded at 33x PE today, it would trade at $360.
noted the analyst.
Ethereum Merge is growing closer
In detail, Ethereum outperformed Bitcoin in the previous week, and the rally came in the wake of the ninth shadow fork before the Merge to proof-of-stake consensus.
The shadow fork was designed to test the updates made in the July 6 Sepolia hard fork. It will also focus on a boost feature dubbed “maximal extractable value” (MEV). It refers to the maximum value extracted from block production on top of the standard gas fees and the block reward.
Also read: Ethereum's mini-rally could do little in protecting ETH from a 30% price drop — here's why.
As CoinChapter reported earlier, the said Merge has been postponed numerous times. For example, the team pinned August as the target timeframe in late May. However, according to internal emails, the new Merge date is Sep. 19.
ETH dev and Beacon Chain “community health consultant” Superphiz commented that Sep. 19 isn’t the “final” date but called the approaching Merge “extremely exciting.”
