Ethereum has reached a decisional point at the head and shoulders neckline and the 100-day crucial moving average. A potential breakout will likely lead to a significant surge due to a massive short liquidation cascade.
The price action in the coming days will play a crucial role in determining ETH’s broader prospects.
Technical Analysis
By Shayan
The Daily Chart
Ethereum has reached a decisional point at a crucial resistance region consisting of the Head and Shoulders neckline and the 100-day moving average at $2.7K. The price action in recent days has shown low-volatility sideways movement, reflecting an equilibrium state between buyers and sellers. This indicates indecision in the market, with neither side able to take control.
If Ethereum can break above this key resistance zone, it would confirm the completion of the HS pattern, signaling a potential mid-term uptrend. A successful breakout would also mean the asset reclaimed the 100-day MA, reinforcing bullish momentum. In this scenario, Ethereum’s price could target the $3K threshold, another significant resistance level.
However, this area is filled with supply, and a failure to breach it could lead to rejection, stalling any upward movement. Therefore, the upcoming price action will be critical in determining Ethereum’s broader prospects.
The 4-Hour Chart
On the 4-hour chart, Ethereum exhibits sideways consolidation near the resistance zone bounded by the 0.5 ($2.6K) and 0.618 ($2.7K) Fibonacci retracement levels. This area has been a challenge for buyers, with several previous attempts to break it rejected due to significant selling pressure.
Furthermore, a slight bearish divergence is emerging between the price and the RSI indicator, suggesting a gradual increase in sellers’ power. This could indicate an impending rejection at the resistance zone, triggering a decline toward the $2.3K support level.
Conversely, a sudden breakout above $2.7K would open the path for further gains, potentially leading to a rally toward the $3K threshold. As a result, the upcoming price movement will provide important insights into Ethereum’s next trend.
Onchain Analysis
By Shayan
As Ethereum approaches a substantial resistance region around $2.7K, analyzing the futures market provides essential insights into the potential price direction over the coming days. The Binance Liquidation Heatmap highlights critical liquidity pools representing a concentration of stop-loss orders and liquidation levels of futures positions.
The chart reveals a notably concentrated liquidity pool just above the $2.7K resistance region, indicating many short positions clustered in this area. This is important because liquidations amplify price movements when prices approach such levels, triggering a liquidation cascade. In this case, a potential breakout above $2.7K would likely lead to the liquidation of many short positions, adding to the buying pressure and potentially pushing the price even higher.
However, there is also the potential for a false breakout, leading to a bull trap. In such scenarios, larger market participants or whales may exploit the high liquidity by executing large trades that briefly drive the price above $2.7K, only to reverse the trend quickly. This rapid price reversal could catch overleveraged traders off guard, pushing Ethereum’s price back below $2.7K and trapping buyers who anticipated a sustained breakout.
