Ethereum has been under pressure recently after a strong rally that cost nearly $5,000. The uptrend remains intact in the higher time frame, but recent rejections and sudden pullbacks have sparked concerns about deeper corrections.
This price action led to a change in the tone of the market, with traders looking carefully at the key support zone and determining whether this was just a dip or the beginning of a wider trend shift.
Technical Analysis
By Shayan
Daily Charts
In the daily time frame, ETH has been climbing into clean upward channels since April, creating higher and higher lows. However, recent drops have broken under the mid-channel trendlines, and assets are currently floating just above the channel’s lower boundary.
The $3.9K-4K region is a strong confluence zone supported by horizontal demand zones, 100-day moving averages, and channel lower boundaries. If this level breaks, the next support will be around $3.4,4,000, followed by a 200-day moving average, and now it’s around $2,900.
Additionally, while RSI has dropped to 34, suggesting an increase in bearish momentum, ETH is also approaching the over-selling conditions where bounces are more likely to be possible.
4-hour chart
Zooming into the 4-hour time frame makes the structure look obviously bearish in the short term. The price is below key support at $4.2,000 and is currently following the parabolic correction path. The momentum is weak, with the RSI surrounded by areas where they are sitting too close to 24, and relief can quickly bounce back.
That said, unless ETH recovers an area of between $4.2,000 and $4.3,000 and forms a local high again, the bias remains bearish. Currently, all eyes are in the $3.8k-4K zone. This is at a critical level that allows you to trigger a powerful rebound, open the door, or open the door to another $3.5,000 or less.
Emotional analysis
Open interest
Ethereum’s open interest has fallen sharply following a recent price decline, indicating that many long leveraged positions have been wiped out during this revision. However, despite the pullback, open interest remains rising compared to the beginning of the year.
This suggests that there is still a significant amount of speculative activity in the market. A sharp decline in OI signals reduced the immediate risk of major liquidation cascades, while a rise in baseline indicates that traders are still positioned for volatility. With key support and sentiment improved and prices stabilized, we saw the OI climb again with potential bounces.
