Ethereum is facing significant struggles as it hovers around the $4,000 mark, showing clear signs of weakness that could signal a troubling trend for investors. Recent technical indicators and liquidity data point toward a precarious situation for the digital asset.
After weeks of stability within a symmetrical triangle, Ethereum has broken out, with rising sell volume confirming the mounting bearish pressure. Critical support levels at the 20-day and 50-day exponential moving averages (EMAs) have been breached, putting further strain on Ethereum’s price. The current focus shifts to the 100-day EMA, which now serves as the last bastion of support before the asset could potentially decline towards the 200-day EMA located around $3,400. Failure to hold at this level could lead to even further declines.
Compounding the concern is the liquidity heatmap, which reveals a significant amount of buy liquidity clustered between $3,800 and $3,500. This area seems to act like a price action magnet; however, with sellers currently in control of the market, there’s a strong likelihood that Ethereum will be drawn toward this dense order block. For bulls, this creates a precarious situation, where the liquidity pool may either trigger a rebound or set the stage for a rapid liquidation event.
Adding to the complexity is Ethereum’s relative strength index (RSI), which is nearing oversold levels but has yet to indicate any meaningful signs of reversal. This suggests that negative momentum continues to dominate the market. Additionally, an imbalance in trading volumes indicates that buying attempts are persistently overshadowed by selling activity.
In summary, Ethereum stands at a critical junction where a deeper correction could be imminent, particularly given the recent breakdown from the triangle pattern and the significant liquidity cluster lying below. While a sudden turnaround is always within the realm of possibility should buyers become active, the current market structure remains fragile. As the situation develops, all eyes are focused on the $3,800-$3,500 range, where Ethereum’s near-term future is likely to be decided.
