Ethereum Price Hits $3,400 Ceiling, Faces $2,800 Reality Check

Ethereum's price has experienced a bearish divergence at the $3,400 resistance level, leading to a sharp decline and increasing the likelihood of a corrective move towards the $2,800 support.

Key Takeaways

Ethereum has confirmed bearish divergence at $3,400, indicating a potential trend reversal.
The $2,800 zone is significant support where buyers are expected to attempt to stabilize the price.
The market's reaction at $2,800 will be crucial in deciding the future price direction—whether it leads to a recovery or a deeper decline.
A shift below the value area high is increasing the focus on lower support levels.

Ethereum price confirmed bearish divergence with lower targets in sight.

Ethereum Price Overview

ETHUSDT (4H) Chart, Source: TradingView

Ethereum’s price is currently displaying short-term weakness after confirming a bearish divergence at the critical resistance level of $3,400. Following a strong upswing into this high-time-frame zone, Ethereum (ETH) struggled to maintain its position above this resistance level. The downward rotation indicates that momentum is shifting from buyers back to sellers.

Understanding Bearish Divergence

Bearish divergence is a strong technical indicator that signals potential market tops, especially when it appears on higher time frames. In Ethereum's situation, while the price reached a higher high around $3,400, the momentum indicated by the Relative Strength Index (RSI) did not confirm this upward movement and instead showed a lower high. This discrepancy often suggests that buying power is waning, even though prices are rising.

What makes this divergence particularly significant is its occurrence at a major resistance zone, where sellers are typically more aggressive in defending their positions. Divergences at these key levels can serve as an early warning that an upward rally may be on the verge of shifting towards a downward correction.

Value Area High Rejections

The Value Area High (VAH) is an essential aspect of volume profile analysis, as it marks the upper limit of accepted market value. When prices are traded above the VAH and maintain that position, it generally indicates bullish acceptance, signaling the potential start for price expansion. Conversely, if prices do not sustain levels above the VAH, the market often retreats back, looking for lower value points.

Ethereum's rejection just below the VAH indicates that the recent price surge faced selling pressure, confirming that the move was met with heavy supply at these elevated levels. This distribution phase occurs frequently when a market rallies against substantial resistance, with buyers losing momentum.

Now that Ethereum is trading beneath the value area high, this reinforces the notion that the market has not accepted higher prices. Instead, sellers seem to have utilized the strength in the market to defend against upward movements, prompting a correction.

Focus on $2,800 Support

The next significant target for Ethereum is $2,800, a vital high-time-frame support level to watch as the corrective move may evolve. This zone is recognized as a key demand area where buyers are likely to step in to support the price.

A potential shift toward $2,800 would be consistent with Ethereum's historical behavior, as its price tends to oscillate between premium resistance and discounted support levels. Should Ethereum reach this support zone, the market’s response will be critical in determining if this is merely a short-lived correction or the start of a deeper downtrend. A substantial bounce back could suggest the market is still range-bound, while falling below $2,800 would indicate a bearish shift in market structure.

The Role of Untapped Support Zones

An important aspect favoring further price pullbacks is liquidity. Often, during rallies, markets leave behind "untapped" demand zones and prior support levels that have not been thoroughly tested. When the market momentum turns bearish, these levels frequently function as magnets for price rotation as liquidity is sought and value is recalibrated.

Ethereum's current weakness heightens the possibility that these lower support zones will be revisited. As long as ETH resides below the value area high with suppressed momentum, the trend toward untapped supports appears to be the more probable scenario.

Future Price Expectations

Ethereum is currently showing confirmed short-term weakness as a result of bearish divergence at the $3,400 resistance point. While prices remain under the value area high and do not reclaim this resistance level, it’s likely that the price continues its descent toward the high-time-frame support of $2,800.

To reverse this bearish scenario, a bullish invalidation would require Ethereum to reclaim the value area high and maintain price closes above it. This move would indicate renewed demand, alleviating the risks tied to the divergence. Until growth returns to the market, sellers seem to have the upper hand, keeping the corrective phase active.