Ethereum Forms Broadening Wedge Pattern with Bullish Rally

Key Insights:

• Ethereum targets $4800 as a bullish rally forms from a broadening wedge pattern.
• Rising DEX volumes and reduced ETH on exchanges signal increasing demand for Ethereum.
• $10B in ETH shorts could trigger a short squeeze if Ethereum breaks key resistance at $4,359.

Ethereum (ETH) is showing promising signs as it forms a broadening wedge pattern on the 4-hour timeframe. This technical setup could lead to a bullish rally, with a potential target of $4800. The volume has been rising, signaling increasing interest in the asset.

Decrease in Ethereum on Exchanges Points to Growing Demand

Ethereum’s return above the $4,000 mark has generated significant attention. With less ETH available on decentralized exchange (DEX), volumes are increasing, and demand appears to be growing. 

As highlighted by Tom Tucker, “Less $ETH on exchanges + DEX volumes jumping 47% this week = growing demand.”

This shift in market behavior suggests that more traders may be holding onto their ETH or transferring it to private wallets, thereby reducing the available supply. With higher demand and a tighter supply, the pressure on prices is likely to continue mounting, further bolstering the bullish outlook for Ethereum.

Technical Analysis Points to Potential Bullish Trend

Ethereum’s price action on the 4-hour chart shows a broadening wedge pattern, a formation that often precedes significant price movements. This pattern indicates increased volatility and suggests that the cryptocurrency could break out in either direction. 

If Ethereum successfully breaks the key zone of resistance, analysts expect the price to rise towards the $ 4,800 level. CryptoBull_360 shared this observation, noting that a Strong flip off from the depicted zone might trigger a bullish rally towards the $4800 price zone.

Traders are waiting for confirmation that the price will break out above the current resistance levels. As the price rises, ETH’s momentum could build, pushing the cryptocurrency towards this target.

Ethereum’s Current Price and Potential Short Squeeze Loom

Ethereum’s recent price movements also coincide with a large number of short positions. Reports suggest that over $10 billion worth of ETH shorts are currently open. These positions could be at risk if Ethereum continues to climb, potentially triggering a short squeeze. Based on IkoWEB3, “if Ethereum pops to $4,359, one massive squeeze and all those bears get wrecked.”

A short squeeze occurs when traders who have bet against Ethereum are forced to buy back their positions as the price rises. This could result in a sharp price increase, further fueling the bullish trend.

At the time of writing, Ethereum was priced at $4,148.07, with a 24-hour trading volume of $39.88 billion. The cryptocurrency has seen a slight increase of 0.35% over the past 24 hours. The rising volume and price action indicate that Ethereum may be preparing for further gains, as traders anticipate a breakout.