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Ethereum’s recent breakdown from a rising wedge at $3,850 signals a potential pullback amid bearish RSI divergence and increasing volume.
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Profit-taking intensifies as Ethereum faces critical liquidity zones near $3,150, with further downside risks targeting $2,800 and below if selling pressure continues.
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According to COINOTAG, the MACD indicator shows fading momentum, and high-volume red candles suggest a possible distribution phase, raising caution among traders.
Ethereum breaks down from rising wedge at $3,850, with bearish RSI divergence and volume surge signaling potential pullback toward $3,150 support zone.
Ethereum’s Rising Wedge Breakdown Signals Bearish Momentum
Ethereum’s price action recently broke down from a well-defined rising wedge pattern that formed since early July, starting near $2,400. This technical formation typically precedes bearish reversals, and the breakdown below the wedge’s lower trendline confirms weakening bullish momentum. The bearish RSI divergence—where price made higher highs but RSI formed lower highs—further underscores the loss of upward strength. After peaking near $3,850, Ethereum’s RSI retreated from overbought levels above 80, indicating a cooling off in buying pressure. This breakdown has triggered increased profit-taking, with traders eyeing key support levels to gauge the next directional move.
Liquidity Zone at $3,150 Could Trigger Long Liquidations
The $3,150 level represents a significant liquidity zone where many long positions and stop-loss orders are clustered. A decline to this area would likely trigger a cascade of long liquidations, amplifying downward momentum. This zone acts as a critical pivot point; a successful hold could stabilize prices, but a breach may open the door to deeper corrections. Should selling pressure persist, Ethereum could test lower support bands between $2,800 and $2,233, levels that historically served as consolidation and long-term support. Market participants should monitor volume and order flow closely around these thresholds for signs of potential rebounds or further declines.
Volume and Momentum Indicators Point to Distribution Phase
Volume analysis reveals a notable increase during the recent price drop, with high-volume red candles suggesting that distribution is underway. While the MACD remains technically bullish—currently at 309.60 versus a signal line of 234.29—the sharp curvature and shrinking histogram bars indicate momentum is fading. This divergence between price and momentum indicators often precedes corrections or sideways consolidation phases. Ethereum’s immediate support lies between $3,200 and $3,400; however, sustained selling pressure could erode these levels, pushing the price toward the wedge’s lower boundary near $2,800. Traders should exercise caution and consider risk management strategies amid this evolving technical backdrop.
Broader Price Outlook and Key Support Levels to Watch
Beyond the immediate liquidity zone, Ethereum’s price action faces multiple support levels that could serve as potential bounce points. The $2,630.16 area acted as resistance in early July before the breakout, making it a logical target if the correction deepens. Further down, the $2,403.47 consolidation zone and the $2,233.80 long-term support level provide additional layers of defense against downside risk. While the broader uptrend remains intact, these technical developments suggest a period of consolidation or mild correction may be imminent. Investors and traders should remain vigilant, balancing optimism with prudent risk controls as the market digests recent gains.
Conclusion
Ethereum’s breakdown from the rising wedge at $3,850, coupled with bearish RSI divergence and rising volume, signals a cautious near-term outlook. The critical liquidity zone at $3,150 will be pivotal in determining whether the correction stabilizes or deepens toward lower support levels. Momentum indicators highlight fading bullish strength, suggesting a potential distribution phase as traders reassess positions. Maintaining awareness of these technical signals and support zones will be essential for navigating Ethereum’s evolving price dynamics in the coming weeks.
