Ethereum Gearing For Potential Long Squeeze As Optimism Builds

Retail investors seem to have an overwhelmingly positive outlook on Ethereum. In an amusing twist of fate, this could actually lead to a decline, as this is a perfect environment for a sudden fall done through a long squeeze.

A Grim Outlook

In the past few hours, it seemed that Ethereum dove down by 10%, seeing its price drop to $152 from its previous $170. Even with such a bearish impulse, data is coming forth that shows that the majority of Ethereum’s retail investors hold an optimistic outlook about the matter as a whole.

On the Bitfinex exchange, long Ether positions have been going parabolic ever since the market crash on the 12th of March. Just on today, there were a recorded 330,000 new positions added, marking an increase of about 30%.

Going For Long

The Hong-Kong based crypto exchange had a substantial rise in long positions for ETH record a new all-time high, clocking in at an impressive 1.39 million. It’s actually quite remarkable, considering how bad the market’s going.

The sheer amount of investors betting on the upside is noteworthy amid this global crash of the economy. While the world is in the process of trying to recover, the coronavirus pandemic has wreaked havoc on the global economy. Should the financial industry receive another hard hit, it could lead to a long squeeze for Ethereum, pressuring traders to panic sell their assets for even more of a loss. The grim irony is the act of mass panic selling only further compounds the terrible market conditions.

Going Long May Cause Large Drop

While many are doubtlessly going long to try and profit from this fear-reigned era of the market, Ether is on a slippery slope at this point. Ether can stand to lose more ground with a long squeeze before it starts to gain ground again.

The TD sequential indicator has started to show warning signs, as is. Recently, it’s presented a sell signal through a green nine candlestick displayed on the 1-day chart on ETH. The bearish formation makes it clear that the giant of the crypto industry’s smart contract sector could suffer up to four candlesticks correction.

Ethereum has now officially dropped to the 23.6% level of Fibonacci retracement. This justifies the pessimistic outlook that the TD sequential index has presented, seemingly validating the grim outlook it portrayed. Should a candlestick close below this critical threshold of support, another downswing could occur, going down to 38.2% or even 50% Fib.