Why Ethereum Was Blocked by the $1,806 Resistance Line Despite 3 Consecutive Days of Spot ETF Net Inflows

▲ Ethereum (ETH) ©

Despite Ethereum (ETH) derivative indicators turning bullish, analysis suggests that the current uptrend is a healthy flow not reliant on leverage, drawing attention to its future trajectory. After the net taker volume, which indicates the difference between buy and sell pressure in the perpetual futures market, turned positive, ETH recorded a 14% rally and is currently trading around the $1,780 mark. Despite the price increase, open interest has remained flat without significant fluctuations, indicating a stable structure with a low risk of rapid liquidations.

According to investment specialized media FXStreet on July 7 (local time), Ethereum temporarily recovered the $1,800 mark during the day, recording an increase of approximately 10% over the past week, driven by improved overall investor sentiment in the cryptocurrency market. This rebound coincides with the net taker volume turning positive on June 28. The estimated leverage ratio, which indicates the ratio of open interest to exchange reserves, has also not shown a significant increase since its decline in June, suggesting that this rally is less vulnerable to leverage shocks such as short squeezes (buying pressure resulting from the liquidation or covering of short positions).

Investor sentiment in the U.S. market has also been gradually improving since last week's labor market indicators were released more moderately than expected. The Coinbase Premium Index, a gauge of buying by U.S. investors, remains in negative territory but has significantly eased from extreme levels seen in early July. Concurrently, according to SoSoValue data, U.S. Ethereum spot ETFs have recorded net inflows for three consecutive days, demonstrating an influx of institutional funds.

The derivatives market is heating up, with $103.1 million worth of forced liquidations occurring in the Ethereum market over the past 24 hours, according to CoinGlass data. Of this, short position liquidations accounted for $78.4 million, increasing upward pressure. However, the fact that futures traders are not yet fully skewed to the upside and are maintaining a cautious stance is considered a factor for short-term volatility.

Chart analysis shows that ETH is still trapped below medium-to-long-term resistance lines, trading below its 50-day and 100-day Exponential Moving Averages (EMA) located at $1,806 and $1,970, respectively. The Relative Strength Index (RSI) is positive at 57, but it is still too early to declare a full-fledged bull market entry. The Stochastic Oscillator is sending an overbought signal near 86, indicating a high probability of encountering temporary resistance around the $1,806 mark where the 50-day EMA is located.

Upon an upward breakout, the next resistance lines are $1,909, the 100-day EMA, and $2,018, in that order, with strong resistance walls formed at $2,108 and $2,211. Conversely, if it declines, initial support is expected at $1,741, with the 20-day EMA at $1,713, and further key support levels at $1,524 and $1,405. If selling pressure intensifies again, the final structural support level is open down to $1,156.

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