Short Covering Fuels Rebound, but the Daily Bearish Structure Remains Intact

Summary:

Ethereum (ETH) gained approximately 4% over the past 24 hours, triggering roughly $101 million in leveraged liquidations across the crypto market. Of that total, $67.2 million came from short positions, making short covering the primary driver behind the latest rally. Although the short squeeze has propelled prices sharply higher, the daily chart continues to show ETHUSD trading beneath its key moving averages, suggesting that the medium-term bearish trend has yet to improve materially.

SELL ETH-USDT

EXP

PENDING

1750.00

Entry Price

685.00

2000.00

1710.66 +9.96 +0.59%

Pips

PENDING

685.00

Exit Price

1750.00

Entry Price

2000.00

Fundamentals

The latest rally has been driven primarily by short covering in the derivatives market. Over the past 24 hours, approximately $67.2 million worth of short positions were liquidated, creating a classic short squeeze. The resulting wave of forced buying accelerated ETH's advance. However, at this stage, the move appears to be more of a technical rebound driven by position adjustments rather than the beginning of a sustainable trend reversal.

Recently, overall sentiment in the cryptocurrency market has remained cautious as global liquidity conditions have tightened, spot ETF outflows have persisted, and on-chain active addresses have declined, leading institutional investors to adopt a more defensive stance.

Nevertheless, several structural factors continue to provide medium- to long-term support. Ethereum's staking ratio continues to rise, locking up an increasing portion of the circulating supply and helping to ease selling pressure. In addition, on-chain data shows that several large whale wallets have continued accumulating ETH at lower price levels, suggesting that long-term investors remain confident and that panic selling has yet to emerge.

Short Covering Fuels Rebound, but the Daily Bearish Structure Remains Intact_1

Technical Analysis

From a daily chart perspective, ETHUSD remains firmly within a bearish trend. Price continues to trade below the 20-day, 50-day, and 100-day moving averages, which are currently clustered between $1,668 and $1,998. The continued bearish alignment of these moving averages indicates that the medium-term downtrend remains intact.

Momentum indicators paint a mixed picture. The Relative Strength Index (RSI) is hovering around 45, remaining in neutral-to-bearish territory, while the Stochastic Oscillator is also near neutral levels. This suggests that bearish momentum is gradually fading, but buyers have yet to gain sufficient control to trigger a decisive bullish reversal. For now, ETH is more likely to remain in a base-building consolidation phase than enter a sustained uptrend.

On the upside, the first major resistance lies near the 20-day moving average at $1,668. A successful breakout above this level could open the door toward $1,743 and $1,806. The 50-day moving average, located around $1,819, coincides with a previous high-volume trading zone, forming a significant supply area. Only a decisive move above this region would allow ETH to target $1,910 and eventually $2,020.

On the downside, traders should closely monitor the descending trendline for support. If ETH breaks back below this trendline, $1,525 will serve as the first key support level. A decisive break below that level could expose the longer-term bottom near $1,156.

Overall, the current rebound appears to be a technical recovery driven by short covering rather than a confirmed trend reversal. Unless ETH can decisively break above its major moving average resistance cluster, the rally should be viewed as a correction within a broader bearish trend rather than the beginning of a new bull market.

Trading Recommendation

Direction: Sell

Entry: 1750

Target: 685

Stop Loss: 2000

Valid Until: 2026-07-31 23:55

Support: 1512, 1386, 1236

Resistance: 1638, 1721, 1850

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