Ethereum has shown a remarkable recovery after a plunge to $3,400, bouncing back above the psychological $4,000 mark. However, it remains limited by major resistance levels, indicating that this uptrend may be in its infancy rather than signaling a solid bullish momentum.

Technical Analysis

The Daily Chart

On the daily chart, Ethereum is rising from the demand zone of $3,400 - $3,500, bringing its price above the 100-day moving average of $4,000 and the channel’s previously breached lower trendline. This surge has been supported by a bullish RSI divergence, showing a decrease in downward momentum and suggesting sellers are losing control after the recent decline.

Current price movements indicate that the lower boundary of the channel has now become dynamic support and Ethereum is stabilizing above this level. Maintaining above $4,300 is crucial for establishing a bullish sentiment and could lead to an advancement towards the supply zone of $4,600 - $4,700. On the contrary, dropping below $4,000 could invalidate this recovery and expose the liquidity pool between $3,600 - $3,400 for further testing.

The 4-Hour Chart

In the 4-hour timeframe, Ethereum is forming a rising wedge after its rapid recovery from the $3,400 low. The price currently hovers around the 0.618 Fibonacci retracement level of approximately $4,250, intersecting with the breakout point of previous declines ($4,200 - $4,300) – a crucial junction for determining short-term price direction.

A breakout above $4,300 would negate the wedge pattern and confirm a bullish trajectory toward $4,450 - $4,700. Conversely, falling below the wedge could reignite weakness, driving Ethereum back towards the demand region of $3,800 - $3,400. While momentum appears constructive, the decreasing volatility within the wedge suggests a significant directional movement may be approaching.

Sentiment Analysis

Data from Binance reveals a sharp decline in ETH’s supply ratio on exchanges, now at 0.33, nearing its lowest since May. This drop follows a brief increase in exchange balances while Ethereum steadied around $4,000.

This decrease in exchange supply points towards a growing number of holders withdrawing ETH to self-storage, a move seen as bullish among traders. With fewer coins available on exchanges, immediate selling pressures diminish, potentially tightening liquidity and setting up a supply squeeze should demand rise.

The data suggests Ethereum’s recovery goes beyond being a mere technical bounce; it reflects genuine network accumulation. If this trend continues and a decisive breakout above $4,300 occurs, the asset could experience a sustained mid-term rally enforced by diminishing exchange liquidity and strengthening market fundamentals.