ETHUSD set to test upper boundary of downtrend channel

ETHUSD continues to move within the medium-term downtrend channel in accordance with the previous forecast. Two weeks ago the price tried breaking out of the channel, but two-year lows attracted a lot of buyers, who helped prevent a further decline. This time, Ethereum’s price may challenge the upper boundary of the channel near the 50-day moving average and the level of 1,880. It is not obvious whether they will be broken, but the bulls should be strong enough to test the levels. 

According to FXStreet, for the first half of this week, Ethereum ETF posted the largest liquidity inflow since early February. At the same time, large holders of ETHUSD withdrew almost 6,000 tokens from cryptocurrency exchanges, creating a local deficit in the market. U.Today estimates that if Ethereum price breaks out of the downtrend channel, it can surge to 2,230, or 25% from the current levels. 

Meanwhile, the latest CME Group’s report points to a significant decline in the number of ETHUSD short positions. Since mid-December, Ethereum has lost two-thirds of its capitalization, and the prospect of further decline no longer looks attractive to traders. The upcoming Pectra update also prompts the bears to be cautious and take profits of recent months. 

Besides, the Bitcoin to Ethereum price ratio has reached a five-year low. A rebound in financial markets, driven by the US authorities’ softer stance on trade tariffs, starts with the most popular assets. First, market participants will buy BTCUSD, and then it will be the turn of ETHUSD and other altcoins. The forecast provided by Investing.com says that an obvious signal for this scenario is Ethereum consolidating above 1,800, which may happen before this week ends. 

Consider the following trading strategy:

Buy ETHUSD at the current price. Take profit – 1,880. Stop loss – 1,660.