Ethereum is in a crucial phase, with an inverted head and shoulders pattern forming on the daily chart and a double bottom pattern on the 4-hour chart, both of which point to a potential slight bullish reversal.
The $2.7k neckline and $2.1k support will be the key areas to watch, as a breakout or breakdown will determine the next major direction.
Technical analysis
Daily Chart
Ethereum is going through a phase of diminishing consolidation, with no clear directional trend emerging recently. However, a key inverted head and shoulders pattern has formed near the $2.1k support zone, a key level that buyers have managed to hold.
This pattern is often a bullish reversal signal, suggesting that a move to the upside could be imminent, especially if ETH can break the neckline at around $2.7k.
Ethereum has nearly reclaimed the midpoint of the multi-month channel, which sits at around $2.5K. If this breakout is valid, buyersâ next focus will shift to the neckline of the inverted head and shoulders pattern at $2.7K. A breakout at this level could solidify a bullish reversal, potentially targeting the $3K resistance zone in the near term.
4 Hour Chart
On the 4-hour chart, Ethereum sellers have struggled to push the price below the lower boundary of the ascending flag pattern, located near $2.3K. This dynamic support level has been tested multiple times, and a break here could trigger a long-term squeeze, sending the price quickly down to the $2.1K support zone. However, Ethereum has also formed a double bottom pattern on this time frame, which typically signals a short-term bullish reversal.
The price is currently confined between the support of the ascending flag and the key resistance zone defined by the 0.5 Fibonacci level at $2.6K and the 0.618 Fibonacci level at $2.8K. Ethereum is likely to continue consolidating within this narrow range until there is a decisive breakout, either to the upside or to the downside.
Onchain Analysis
Ethereum is currently stuck in a price range of $2.1K to $2.7K, and a detailed look at the Binance liquidation heatmap shows key liquidity zones that could influence an impending breakout. The heatmap shows concentrated liquidity zones, such as stop-loss orders and liquidation levels, which are mainly driven by more important market participants, including whales.
The cryptocurrency is facing a mild consolidation phase with minimal volatility, reflecting a balance between buyers and sellers. On the downside, the $2,000 region is strongly defended by whales and institutional traders, as evidenced by the significant liquidity pools concentrated in this area. On the other hand, the $2.8k resistance zone represents a formidable barrier, as it holds a significant amount of liquidity.
This concentration of liquidity suggests that many traders, especially large ones, have placed their liquidation points around this price level, making it important. A breakout in either direction could lead to a cascade of liquidations, triggering a chain reaction of stop-loss orders and liquidations that could amplify the prevailing trend.
