Ethereum has extended its recovery over the past few sessions, breaking out of recent price ranges and approaching a major confluence resistance area. While this rally has improved near-term sentiment, the market is now testing a zone that will determine whether this move develops into a broader trend reversal or remains a relief rally within the general downtrend.
Ethereum Price Analysis: Daily Chart
Ethereum continues to recover from the $1.46,000 to $1.53,000 demand zone, with buyers re-entering after holding off the June lows. This rebound has now carried prices towards the downtrend line, capping the major gains since the May peak.
Recent advances have also reclaimed the $170,000 area, $ETH Just below the next major resistance cluster around $1,82,000 to $1,86,000. This area is particularly important because it coincides with the long-term downtrend line and forms an important technical confluence.
The momentum has improved considerably. The bullish RSI divergence mentioned above continues, with the indicator making further highs while prices recover sharply from support. This suggests that bearish momentum has weakened significantly compared to previous declines.
Nevertheless, the broader trend cannot be considered bullish until Ethereum breaks above the downtrend line and reclaims the higher resistance band. A rejection from this area would sustain the series of lower highs that have defined the market for the past few months.
$ETH/USDT 4 hour chart
The 4-hour chart shows that Ethereum has successfully broken out of the short-term consolidation and reached the first resistance zone around $1.7 million to $1.74 million. Buyers are maintaining strong momentum after the breakout from the lower range, allowing the price to approach the upper end of the downside structure.
Prices are currently trading just below the downtrend line that has repeatedly rejected previous attempts at recovery. A decisive breakout above this trendline would represent the first meaningful structural improvement since the broad decline began and could open the door to a move into the $1.82,000-$1,86,000 resistance area.
Buyers maintain short-term control as long as Ethereum remains above the recently retaken $1.7 million area. However, failure to break out of the downtrend line could trigger further rejection, pushing prices back to lower support levels and extending a broader correction structure.
sentiment analysis
The one-month liquidation heatmap highlights a significant concentration of leveraged positions above current market prices, particularly within the $2,000 to $2,2000 range.
These indirect liquidity clusters could act as price magnets in the coming sessions. If Ethereum successfully breaks out of the downtrend line and continues its recovery, the market could accelerate towards this area as short-term liquidations fuel further upward momentum.
But the reaction after such a liquidity sweep could prove to be even more important than the rally itself. Once the $2,000-$2,2000 liquidity is absorbed, the market will find out if the buyers have accumulated enough strength to establish a sustainable bullish trend, or if the move was primarily a liquidity squeeze.
If bullish momentum remains strong after clearing indirect liquidity, Ethereum could enter a broader recovery phase. Conversely, failure to break out of that area increases the likelihood of further significant declines, with prices likely to fall targeting the significant liquidity cluster that remains below the current market. Such a sequence fits the market’s tendency to move between major pools of leveraged liquidity before establishing the next directional trend.
