Key Insights:

• Ethereum appears to have established a support level around $3,900, indicating a potential local bottom.
• A unique technical pattern, referred to as the Power of 3 setup, predicts an impressive breakout of 80% to 100% during the fourth quarter.

Concerning the recent market movements, Ether (ETH) seems to have reached a critical support at $3,900, where a significant technical pattern indicates a potential for a further notable increase. According to a daily chart, traders are observing the re-emergence of the Power of 3 model, suggesting traders could look forward to a breakout similar to the scenario witnessed earlier this year, driving ETH from $2,000 to $4,900.

Ether PO3 setup Ether PO3 setup. Source: Cointelegraph/TradingView

Market analysts have identified that the most recent trends mirror earlier historical data. Significant purchasing activity occurred at price levels between $4,800 and $4,200 before a swift decline saw values dip briefly under $4,000. This behavior is interpreted as a possible liquidity sweep, clearing out external liquidity around $4,180, a level previously identified as critical in earlier analyses.

The adjustments within the market appear to support a bullish narrative, affirming the possibility of a repeat of past performance structures, especially as momentum indicators strengthen this bullish perspective. A daily close above $4,500 would further solidify a base for ETH’s impending rise.

Looking ahead, analysts are optimistic about a possible breakout in Q4, projecting gains similar to highs seen earlier this year. The established low under $3,900 is indicating a stable ground, hinting at potential new highs shortly.

Ether Derivatives and Market Dynamics

Open interest (OI) and cumulative volume delta (CVD) for Ether have only experienced modest increases, even as prices surged about 15% this week. This situation suggests that the recent price rise isn’t yet driven by leverage, thereby mitigating risks of forced long liquidations, while also allowing room for OI expansion to support further uptrends if spot demand continues.

Ether price, open interest, and futures data Ether price analysis: Source: Coinalyze

In contrast, a noticeable drop in spot CVD amidst rising prices signals aggressive selling behavior in a bullish market. This bearish divergence could incite volatility if support levels are challenged.

Expectations identify a significant area of interest established between $4,100 and $4,250, noted for significant liquidity clustering. If price momentum fails to maintain above $4,500, this zone may become pivotal for price re-entry and potential support.

Ether four-hour chart Source: Cointelegraph/TradingView

This article does not constitute investment guidance. All investment decisions pose risks, and readers are encouraged to perform thorough research before proceeding.