Failure to break this resistance level would spell trouble for ETH

Ethereum’s recent price action highlights a mix of bullish momentum and cautious consolidation, with the price approaching critical resistance at $3.5k.

A break above this level could pave the way for a major rally, but the potential for a continuation of the consolidation phase remains.

Technical Analysis

By Shayan

The daily chart

Ethereum’s upward trajectory has been marked by corrective pullbacks, which found support near the 200-day moving average at $3,000. This zone acted as a major support, with increased buying activity pushing the asset towards the crucial $3.5K resistance, a region that aligned with previous swing highs .

The $3.5K threshold represents a decisive supply zone despite renewed bullish momentum. If buyers break through this resistance, Ethereum will likely continue to climb toward its all-time high. However, failure to reach this level could extend the consolidation phase as the market digests recent gains.

The 4 hour chart

The 4-hour period provides a clearer picture of Ethereum’s bullish structure, showing a substantial rise leading to the $3.5K resistance. After this move, the price consolidated, forming an ascending wedge pattern. This pattern is often considered bearish, suggesting a potential distribution stage.

Also, a bearish divergence between the price and the RSI indicator indicates waning momentum. Combined with the $3.5K supply pressure, this could increase the likelihood of a consolidation or minor pullback.

However, the cryptocurrency market remains unpredictable and the substantial influx of participants could lead to sudden price spikes. These moves could lead to short liquidation cascades, sending the price up quickly. Given these dynamics, traders should be cautious and closely monitor market conditions during this critical phase.

By Shayan

Ethereum has continued to form higher highs and higher lows, approaching the $3.5K resistance level. However, its inability to breach these key levels, either above $3.5K or below $3K, strongly influences market liquidity.

The heat map indicates that substantial liquidity resides below the $3,000 level, likely stemming from stop-loss orders and liquidation points from major market participants, including whales. This explains why the price has defended strongly above this level. Whales and other significant players appear to be actively preventing a default, as such an event would trigger a liquidation cascade, forcing them to take losses.

Likewise, the $3.5K area also has considerable liquidity, representing a concentration of sell orders and liquidation levels for short positions. This liquidity has turned the $3.5K mark into formidable resistance, with dominant sellers and takers near that level. A break above it, however, could trigger a cascade of short liquidations, fueling a rapid rise in Ethereum’s price. Ethereum price is currently oscillating between these two important liquidity zones, creating a consolidation phase. A break in either direction could dramatically amplify market volatility.

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