Ethereum (ETH) is subject to price manipulation like most tradable financial assets. A smaller market cap, low volume and lack of regulations make it a bit easier. During the past few days, ETH/USD has been of the biggest beneficiaries of the pumps that have returned bullish euphoria to the market despite heavily overbought conditions. The price closed below the 200 Day EMA yesterday and is still trading below that level after a sharp pullback. However, most analysts and traders are still expecting a rally towards $200 or higher levels which could very well happen. No matter how overbought an asset is, it can always appreciate in price. The daily chart for ETH/USD shows that there is certainly room for a rally towards $200. However, if we look at the price action it does not seem like there is an organic buying interest in ETH/USD just yet.
The price action demonstrates the weakness that one would expect under such heavily overbought conditions. Investors are reluctant to buy at these prices when both the RSI and the Stochastic RSI are this overbought. We can see that in the form of the sharp pullbacks and the long wicks on candles around the 61.8% Fib retracement level. This confirms that the buying interest is not real. The whales are using scare tactics to wipe off traders on both sides. Bitcoin (BTC) closed below the 50 Week EMA but ETH/USD pumped all of a sudden and shot up above $180 after the weekly close. If we look at the intent behind these moves, it is clear that some people are very scared about their long term holdings. They know full well that the market could decline further but they do not seem ready for that which is why they keep pumping the price on exchanges to protect the price of their long term holdings while they sell.
The weekly chart for ETHUSDShorts shows exactly what is going on. For the first time in the last seven weeks, ETHUSDShorts has formed a green candle. The weekly Stochastic RSI is massively oversold and ETHUSDShorts is trading in a large falling wedge which could break to the upside any time putting massive pressure on the price of Ethereum (ETH). The price of Ethereum (ETH) keeps on rising despite overbought conditions while BTC/USD trades sideways for the most part. This confirms that some people are very desperate to convince the average investor that Ethereum (ETH) is about to fly so they can dump on them.
There is absolutely no doubt whatsoever that Ethereum (ETH) is due for a major pullback. It’s a certainty. The only question is when. They could pump the price towards $200 or even $300 but that does not alter the fact that the price has not been this overbought in Ethereum (ETH)’s entire trading history and is now due for a sharp pullback which could very likely see it fall to a new low in the weeks ahead. So, while the whales are busy hunting stops on both sides, it is the retail traders that are going to suffer the most if they fall for their antics and give in to short term sentiments.