Ethereum [ETH] has been experiencing a pullback after a recovery, revisiting the bottom boundary of its ascending channel at approximately $1,733.
This pullback stood out as it was followed by a bull run that pushed ETH up to the middle portion of the structure and then slowed down. Buyers were able to defend the price when it pulled back to the 200-hour SMA, which is now sitting under all current price action.
Since the last major drop, the channel has continued to act as a guide to push price higher, indicating that the most recent pullback represents a reset rather than a total reversal of trends.
The pull-back could serve to eliminate some of the over-leverage built into the market from the last run. However, loss of the 200-hour SMA will indicate possible short-term bearishness.
If the price falls through the channel support, there will be a significant shift in short-term sentiment. Sellers will likely begin looking for areas such as the $1680 region as their next area of interest.
Moreover, if they can gain enough strength here, there will be a potential continuation downward towards the lower value zone around $1580.
Still, if buyers successfully defend the price above the 200-hour SMA, this will increase the likelihood of another push toward the top end of the channel near $1860.
Bearish positioning meets critical support
As Ethereum approached an important resistance zone in relation to the price of $1,733, a whale has placed a $72.4 million short position with 3x leverage.
The whale shorted the altcoin at $1,735 and was sitting at $60,558 in unrealized profit from the trade.
This development matters because the trader has reportedly avoided a losing trade for four consecutive months. As a result, some participants view the position as a signal of further downside risk.
However, the trade also creates a visible liquidity target. The liquidation level sits far higher at $2,565, leaving substantial room for volatility.
On the other hand, if Ethereum can sustain its current price, it will mount pressure on the whale’s position. At that time the whale could lose money due to a squeeze, which is a buy movement in Ethereum, and the whale’s original short position becomes a source of liquidity.