Can Ethereum price reclaim $2,400 as it eyes a bullish reversal amid market recovery?

Ethereum bulls pushed its price to nearly $2,200 on Thursday amid a market-wide recovery.

According to data from crypto.news, Ethereum (ETH) price rallied over 11% to a 4-week high of $2,192.

Ethereum price rallied amid a broader market recovery led by Bitcoin. The bellwether reclaimed the $73,000 mark for the first time since early February as reports emerged that the U.S. and Iran could be negotiating a deal to end their military confrontation. 

As ETH price rose, it triggered a short squeeze of traders with highly leveraged bearish bets in the derivatives market. Data from CoinGlass show over $133 million in short positions were liquidated in the past 24 hours, compared to only $21.5 million in long positions.

A return of inflows into spot Ethereum ETFs also seems to suggest that institutional investors had played a significant part in the recovery. Per data compiled by Farside Investors, spot Ethereum ETFs drew in $169.4 million yesterday.

Simultaneously, Ethereum’s open interest shot up nearly 15%, which is a sign of increased derivatives market activity after multiple days of stagnation. While the weighted funding rate remains negative at press time, if it continues to climb, a shift toward positive funding rates could signal a return of bullish sentiment. 

This surge in activity suggests that traders are once again aggressively positioning themselves, potentially setting the stage for more volatility if the price breaks key resistance levels.

On the daily chart, Ethereum price has formed a double bottom pattern, a major bullish reversal pattern formed of two consecutive troughs. The neckline of the pattern lies at the $2,200 psychological resistance level.

A breakout from the neckline could push Ethereum to $2,400, which aligns with the 38.2% Fibonacci retracement level that is often seen as a critical target for a trend reversal.

It should also be noted that a successful reclaiming of the $2,400 mark would invalidate a larger bearish flag pattern forming on the chart.

Key technical indicators seem to suggest that bulls are already on the move. Notably, the MACD lines have formed a bullish crossover and were pointing upwards, while the Aroon Up showed a reading of 92.86%, far above the bearish indicator at 35.71%.

For now, traders are eyeing $2,142, the 23.6% Fibonacci retracement level, as a key resistance. ETH was trading at $2,117 when writing, just 1.1% below that mark.