ETH Looks Set To Lower $4,000 After Recent Bounce: Ethereum Price Analysis

Ethereum has been oscillating within the critical range of $3.5K to $4K, and its price has recently found support near the lower limit of $3.5K.

After this bounce, the bulls attempt another push towards the $4,000 resistance level.

Technical Analysis

By Shayan

The daily chart

The bullish momentum in Ethereum price was met with a break at the $4K resistance, which has proven to be a key selling area. This rejection led to a decline towards the lower end of the range at $3.5 thousand. However, renewed buying activity at this support has led to another strong push to the upside, targeting the $4,000 threshold.

The $4K resistance is critical as it aligns with Ethereum’s previous swing highs and has repeatedly rejected bullish attempts. Accordingly, the near-term outlook suggests continued consolidation within the $3.5K-$4K range. A decisive break above the $4,000 level could pave the way for a broader bullish rally.

The 4 hour chart

In the 4-hour period, ETH faced a strong rejection of the $4,000 resistance, resulting in an impulsive decline below the mid-limit of the ascending channel at $3,800. This move reflects the strong presence of sellers at the $4,000 level, making it a formidable barrier for buyers.

Despite this setback, Ethereum found support near the $3.5K level, where buying pressure intensified. The subsequent bullish momentum pushed the price above the middle boundary of the channel, bringing it closer to the $4K resistance once again.

While buyers remain eager to breach the $4,000 threshold, bearish divergence on the RSI indicator signals caution. A near-term consolidation below this resistance seems likely before another possible bullish breakout.

Onchain analysis

By Shayan

Ethereum’s price behavior, especially its stability at the $3.5k support level, reflects the significant liquidity concentrated below this threshold, as highlighted by Binance’s liquidation heat map. Likewise, the $4,000 resistance level marks another critical zone of liquidity, primarily associated with short positions placed in anticipation of a price rejection.

These two levels represent the highest concentration of liquidity near the current price. If ETH successfully breaches the $4,000 resistance, it could trigger a short liquidation cascade as short sellers rush to cover their positions. This is likely to result in an impulsive increase in prices, as the unwinding of these positions fuels further upward momentum.

However, a break in either direction has the potential to ignite a liquidation cascade, intensifying the subsequent price move. Given the prevailing market dynamics, a bullish break above $4,000 seems the most likely scenario.

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