Here’s why Ethereum price may retrace despite the upcoming ‘Merge’ hard fork

  • Ethereum price shows signs of exhaustion around the $1,730 resistance level.
  • Although the Merge is a bullish event, multiple forks could cause panic and frenzy in the market.
  • A daily candlestick close above $1,730 will invalidate the bearish thesis for ETH.

Ethereum price and the altcoins closely related to the ecosystem have been rallying massively over the last few weeks. While this narrative makes sense, investors need to pay close attention to Merge, which is scheduled to occur on September 19.

Galois Capital analysts are sounding the alarms about the complex situations that are yet to arise during the upcoming hard fork for the implementation of Merge. The major takeaway is that mines are not going to sit by idly and transition into Proof-of-Stake and are likely to cause a fork in the ETH chain, leading to multiple Ethereum blockchains.

This development, if it occurs, is similar to what happened in 2016, when a hacker siphoned $600 million worth of ETH from the DAO (Decentralized Autonomous Organization). This led to a chain split due to indecisiveness among the participants.

As a result, the Ethereum blockchain forked into Ethereum and Ethereum Classic.

A similar event could unfold, especially with a popular Chinese Ethereum miner Chandler Guo rallying behind the idea of forking the Ethereum Proof-of-Work blockchain.

Ethereum price reversal on the horizon

Ethereum price bulls clearly showed exhaustion as they retested the $1,730 hurdle for more than three days. Despite multiple attempts, ETH failed to move past this level, indicating a lack of buying pressure and a large stack of selling pressure.

Therefore, the next logical thing for Ethereum price to do is retrace. A 9.7% drop seems likely for ETH to retest the $1,543 support level. Interestingly, this level coincides roughly with the point of control, aka the highest volume trade. 

The volume profile is drawn only for the recent run-up extending from July 13 to August 1. This allows investors to know if the uptrend was strong and backed with enough volume. 

A breakdown of the $1,543 support floor could send ETH down to $1,350 and below this level, the volume profile thins out considerably, hinting at a steep decline to $1,080. 

ETH/USD  4-hour chart

Regardless of the bearish signal, good news for the Merge enthusiasts could trigger a buying frenzy. If Ethereum price produces a daily candlestick close above $1,730, it will invalidate the bearish thesis and trigger a potential move to $2,000.

 



This news is republished from another source. You can check the original article here

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