Ethereum continues its correction phase after failing to maintain momentum above $4,200. Market sentiment remains cautious as ETH trades around $3,700, showing weakness both technically and sentimentally. Buyers appear to be losing control and the focus is now shifting to the key support zones below.
Technical analysis
By Shayan
The daily chart
On the daily time frame, ETH has broken below the long-term rising channel structure and the 100-day moving average, which is around $4,100. The price is currently moving towards the 0.5 Fibonacci retracement level at $3,530. This zone is a critical area that previously acted as support, and is the basis of the most recent rally in August.
The RSI around 37 indicates bearish momentum but has not yet reached oversold territory, implying further downside is possible. A clean breakdown below $3,500 could open the way to the 0.618 retracement level at $3,200, while regaining the last price high around $4,200 would be the first sign of recovery.
The 4-hour chart
The 4-hour chart shows clear bearish order flow as the downtrend worsens after losing the $4,200 level and failing to regain this level. The recent rejection from this zone has confirmed a shift in the short-term market structure to bearish.
Momentum remains weak with an RSI near 33, indicating that sellers are still dominating. The next demand zone is around $3,500-$3,400, where buyers recently held their ground amid the massive liquidation. However, failure to hold this level could accelerate the move towards $3,200 or even $3,000 in a deeper decline.
Sentiment analysis
Long liquidations
Ethereum’s latest decline caused a notable spike in long-term liquidations across all exchanges, marking one of the largest deleveraging events in recent months. This rise in foreclosures reflects how overconfident long traders were caught off guard by the market’s rapid turnaround.
Historically, such liquidation peaks often appear near local bottoms as leveraged positions are flushed out. However, the magnitude of this latest move signals panic among retail traders, with institutions likely waiting for clearer confirmation before re-entering.
Overall, sentiment remains fearful and risk-averse, with traders favoring caution over aggressive long-term exposure in the short term.
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