Ethereum has been displaying weakness following its inability to reclaim the $4,200 resistance level. Despite early bullish signals this month, the price remains constrained within a descending channel, with the recent upturn being quite weak. Traders are keenly observing whether ETH can establish a higher low or face further declines.

Technical Analysis

By Shayan

The Daily Chart

Ethereum continues to adhere to the boundaries of the descending parallel channel, facing multiple rejections from the upper trendline. The last attempt to break above $4,200 was unsuccessful, pushing the price back towards the mid-range and testing support around $3,700.

Currently, the asset is still above the 200-day moving average, a pivotal support level, yet we’re witnessing the formation of lower highs, indicating diminishing bullish momentum.

The daily RSI has dropped to approximately 42, signaling a relaxation in buying pressure without entering fully oversold conditions. If ETH loses support at $3,700, the next significant demand zone appears to be near $3,400, where the lower channel support and a horizontal level intersect. Conversely, if buyers manage to regain the $4,000 area, another test of the $4,200 level is likely.

ETH Daily Chart

The 4-Hour Chart

In the 4-hour chart, ETH witnessed a sharp decline post-rejection from $4,200, dropping into the lower end of the range before a minor rebound occurred. The price currently hovers around $3,800, attempting to regain momentum, with the RSI signaling potential short-term relief or range-bound consolidation.

However, ETH remains under significant resistance at $4,000, a breach above which could re-attract buyers. Until then, any short-term rebounds may encounter selling pressure, and if the current rally fails, ETH may retest the $3,650 low or even touch the $3,400 demand zone.

ETH 4-Hour Chart

Sentiment Analysis

Open Interest

Ethereum’s open interest has significantly decreased from over $32 billion to around $22.8 billion. This decline illustrates widespread deleveraging across the market, likely caused by stop hunts and liquidations. This rapid unwind of positions suggests that many over-leveraged long positions were forced out, particularly after ETH’s failing push against the $4,200 resistance. This type of drop is often essential to reset overheated market conditions.

As open interest has yet to recover proportionately with the price, traders appear hesitant to re-engage with larger volumes.