Ethereum bulls fold before the Merge, but this is why ETH price pullback isn’t a bad thing
|- Ethereum price is bleeding just a few days before the much-awaited Merge.
- ETH price may touch the 100-day SMA at $1,500 before a sustainable trend reversal comes into play.
- Ether’s pullback may be a blessing in disguise if the token collects liquidity ahead of another northbound move.
Ethereum price is giving up on its bid for a pre-Merge rally amid concerns over rising inflation levels. The leading smart contracts token exchanges hands slightly above $1,600, with losses expected to close below the same level on Tuesday. On the bright side, this pullback might give investors another chance to catch an anticipated Merge-triggered bullish breakout above $2,000.
Read more: Ethereum v. Bitcoin: ETH is winning despite BTC price rally to $22,000
Rising inflation wreaks havoc in global economies – Ethereum price bows to selling pressure
Global markets, including crypto and stocks, have given back tentative gains on Tuesday following reports of hotter-than-expected inflation levels in the United States. The country’s consumer price index (CPI) inflation grew by 0.1% for the month and 8.3% annually throughout August.
Market participants expect the Federal Reserve to continue tightening the monetary policy, which could further cause more pain. The Federal Open Market Committee (FOMC) will be meeting in September to review measures in place in August. A 0.75% rate hike seems very likely- making it the third one this year.
Meanwhile, Ethereum losses are unlikely to stop at $1,600 – a support area reinforced by the lower boundary of an ascending trend line. The Direction Movement Index (DMI) is on the verge of confirming the Ethereum price downtrend.
Traders wishing to short Ethereum price to the 100-day (blue) Simple Moving Average (SMA) should be on the lookout for the +DI as it crosses below the –DI. Further confirmation will stem from the price ratifying a break below the ascending channel.
ETH/USD daily chart
Ethereum price pre and post-Merge rallies are still possible, notwithstanding the global economic pressure. The software upgrade on September 15 will be the biggest in Ether’s history – eliciting interest across the crypto space.
Read more: Ethereum holders watchout for proof-of-work fork post Merge
If investors quickly move past the pullback on Tuesday, they may appreciate vital support areas that IntoTheBlock’s IOMAP on-chain model highlights. According to this metric, 1.37 million addresses purchased 8.56 million ETH tokens between $1,557 and $1,064. If this region is defended, new buy entries will trickle in as Ethereum price escapes bearish shackles to spike above $2,000.
Ethereum IOMAP model
A rebound from support at $1,600 would be largely undeterred due to the relatively weak resistance levels. A seller congestion zone is projected in the region running from $1,609 and $1,657, but it might not be robust enough to prevent Ethereum price from sprouting to $1,800 and later to $2,000.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.