- Â Ethereum struggles below $4,000, signaling potential for deeper market declines.
- Â Liquidity clusters at $3,800-$3,500 may push Ethereum further downward.
- Ethereum breaks key support levels, signaling risk of further correction.
Ethereum has shown signs of weakness as it hovers near the $4,000 level. Technical indicators suggest a bearish outlook, with liquidity data raising concerns for investors. The cryptocurrency has broken out of its consolidation pattern, which increases the risk for bullish traders.
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Ethereum Breaks Key Support Levels
Ethereum recently dropped below its 20-day and 50-day exponential moving averages (EMAs), which is an indication of the weakening support. These critical levels have been breached, and Ethereum is now prone to more declines. The next defence that analysts are now addressing is the 100-day EMA, which will serve as a defence in the event that the 200-day EMA of approximately $3,400 serves as a potential target.
Source: Tradingview
The breakdown of the symmetrical triangle puts additional strain on Ethereum’s short-term outlook. A decline towards the 200-day EMA could potentially accelerate bearish momentum.
Liquidity Clusters Raise Concerns for Bulls
The liquidity heatmap of Ethereum shows a worrying image, particularly between $3,800 and $3,500. The buy liquidity has an intensive concentration that might serve as a price action magnet. This cluster is potentially causing a rebound, but it is a danger to the bulls since it may hold them in a further decline.
As Ethereum approaches this liquidity pool, traders remain divided on its next move. Sellers are in control at the moment, and the liquidity zone may pull Ethereum down further.
Bearish Momentum Dominates Ethereum’s Market Structure
The Relative Strength Index (RSI) of Ethereum is almost reaching the state of oversold but has not reversed it yet. This implies that the market is still under bearish momentum. In the meantime, the trading volumes suggest that sell orders always overwhelm any attempts to buy, which is also a confirmation of the existing downward trend.
Ethereium has a weak market structure despite the possibility of recovery at a quick rate. Having focused on the range of $3,800 to $3,500, subsequent sessions will reveal whether Ethereum will be stable or experience even more declines.
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