Ethereum price rallied hard over the last couple of weeks, but the sell signals may have appeared

Many people have started flocking to buy ETH after Ethereum’s much-anticipated London hardfork. Although the Ethereum price has increased due to growing demand, several technical and on-chain indicators suggest that profit-taking is rising. This seems to be a sell signal.

Ethereum price shows red flags following 60% rally

Despite the bullish momentum, Ethereum could face an imminent correction. ETH had an impressive rally after breaking out of a descending triangle on July 22. Since then, the second-largest cryptocurrency by market cap has rallied nearly 60% to hit a high of $3,200. Now that the expected target has been met, more red flags are starting to pop up.

The Tom DeMark (TD) Sequential indicator has presented a sell signal on ETH’s daily chart. The bearish formation developed as a green nine candlestick, anticipating a one to four daily candlesticks correction or the beginning of a new downward countdown.


Source: TradingView

The 30-day MVRV ratio is currently hovering at 26.58%, suggesting that all addresses that have bought ETH in the past 30 days sit at an average profit of 26.58%. According to behavior analytics platform Santiment, the higher the MVRV ratio, the higher the risk that Ethereum holders will begin to sell and reduce their exposure.


Source: Santiment

Given the significant unrealized profits among ETH holders, Ethereum is currently in a danger zone. Historical trends indicate that a spike in profit-taking may be underway, translating into a short-term correction.

Even so, there are a few other indicators that point to an uptrend in ETH. According to IntoTheBlock, the open interest for Ethereum-based perpetual futures has surged to $8 billion for the first time since May.

“Ethereum Perpetual Swaps Open Interest crosses the $8 billion mark for the first time since May 18. Open Interest refers to the dollar amount of contracts outstanding. As the price of ETH has been climbing alongside OI is said to confirm an upward trend”, IntoTheBlock stated.


Source: IntoTheBlock

Crypto trader and analyst Willy Woo has shared a chart that shows an Ethereum supply shock hitting an all-time high. He says that the second biggest crypto was likely to be overpriced in May when it hit an all-time high. However, he expects it to be underpriced now.


Source: Willy Woo

At press time, ETH is changing hands at $3,3132, up over 25% over the past seven days.

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