Ethereum surged 3.8%, approaching a bullish flag breakout with targets near $3,600. Derivatives data show rising open interest and growing bullish momentum.

As Bitcoin approaches $110,000 once again, Ethereum outperforms with a 3% surge, nearing a potential flag breakout. Will this rally propel Ethereum toward $3,600?

Ethereum Price Analysis

On the daily chart, Ethereum displays a sideways trend between two key Fibonacci levels. The 38.20% Fibonacci level near $2,400 acts as support, while the 50% level around $2,700 serves as the upper resistance.

With a 3.81% price increase on Tuesday, Ethereum formed a bullish candle near the upper resistance level. This development boosts the potential for a breakout rally as the broader market recovers.

Currently, Ethereum is trading at $2,638, with a minor pullback of less than 1%, while maintaining bullish momentum. Supporting the breakout potential, the 50-day and 100-day EMA lines are on the verge of a positive crossover.

However, the daily RSI line hovers just below the overbought threshold, indicating a slight loss in momentum as it retraces from overbought territory. Still, the indicator remains positive, supporting the case for an upside breakout.

As Ethereum moves closer to a flag breakout, the pattern suggests a potential 33% rally toward $3,577. This bullish move could surpass the 78.60% Fibonacci level at $3,436.

Optimistically, this opens the door to reaching the 100% Fibonacci level near the psychological $4,000 mark. On the downside, critical support remains at the 38.20% Fibonacci level, followed by the 100-day EMA at $2,259.

ETH Derivatives Surge With Strong Optimism

With the recent surge, bullish sentiment in the Ethereum derivatives market has grown significantly. According to Coinglass, ETH open interest has increased by 7.4% to $35.48 billion, setting a new all-time high, while trading volume jumped nearly 40% to $79.51 billion.

Notably, the options market has seen a major uptick, with a 64% increase in volume to $1.10 billion. Meanwhile, options open interest stands at $8.58 billion, a 3.79% rise.

As trading activity intensifies, the growing bullish sentiment is evident in the rising funding rate, which has reached 0.0068%. Additionally, the long-to-short ratio has climbed above 1.02%, indicating a shift in favor of bulls.

Interestingly, 24-hour liquidations show a larger wipeout of bearish positions, with short liquidations totaling $45.16 million compared to nearly $24 million in long liquidations.