Ethereum is currently navigating a challenging market, trapped in an ongoing downtrend characterized by repeated rejections at key resistance levels. The prevailing sentiment remains bearish; however, recent signals suggest potential sell-side exhaustion, hinting at the possibility of a short-term recovery if buyers can reclaim crucial price levels.
Analyzing the daily chart reveals that Ethereum is still operating within a constricting descending channel. The asset has struggled to break past the dynamic resistance marked by the 100-day and 200-day moving averages, both of which have been significant barriers to upward movement. Following its latest rejection near the $3.8K supply area, the market is firmly in the hands of sellers.
Currently, Ethereum is holding within the $3K to $3.1K demand block, an area historically favored by medium-term buyers. Additionally, a positive divergence in the Relative Strength Index (RSI) suggests a slowdown in the bearish momentum that could herald a turnaround. Nonetheless, without reclaiming the $3.45K to $3.55K resistance zone, the market remains susceptible to further declines toward the more significant $2.6K demand level.
On the 4-hour chart, ETH is trapped within a sharp falling wedge. Attempts to break upward have consistently met with resistance at the descending trendline and the established supply zones at $3.55K and $3.8K. Presently, the price hovers near the lower boundary of the wedge and above a crucial liquidity pool around $3K. The presence of long downside wicks indicates buyers are starting to absorb aggressive selling, consistent with the corrective pattern of the falling wedge. If Ethereum can reclaim the $3.35K intraday pivot, a movement toward the $3.55K area is likely.
On the on-chain analysis front, a two-week liquidation heatmap reveals a significant concentration of resting long liquidations just above current price levels, particularly between $3.6K and $3.9K. This cluster acts as a liquidity magnet for any upward momentum, demonstrating a historical tendency for Ethereum to gravitate towards high-liquidity zones during short-term relief phases. Conversely, the liquidity beneath the current price is considerably sparser, meaning that any further downward movement may be sharp yet fleeting.
The strongest imbalance is identified between $3.8K and $3.9K. Therefore, if Ethereum can gain traction above the $3.45K level, a swift rally into this liquidity band may follow, underscoring a potential recovery phase amid ongoing volatility in the market. As investors remain watchful, these developments highlight the dynamic nature of Ethereum’s trading behavior, igniting cautious optimism for a possible rebound as market conditions evolve.