Ethereum has extended its downward trend and is now trading inside a critical multi-month demand block. With liquidity being aggressively flushed above and below the price, ETH is approaching a major decision point where either a relief rebound or a deeper capitulation into the lower demand zones may unfold.
Technical Analysis
By Shayan
The Daily Chart
ETH has continued its sharp corrective leg, sliding from the $3.5K–$3.6K supply zone and breaking decisively below both the 100-day and 200-day moving averages. This breakdown has placed the asset directly inside the $2.7K–$2.85K demand region, which previously acted as the launchpad for the July breakout.
The daily market structure remains firmly bearish, with a clear sequence of lower highs and lower lows. The descending channel, combined with the failed retest of the 200-day MA, suggests that sellers are still in full control.
The current zone around $2.7K is where the price last accumulated before the August rally. A clean loss of this area would expose the next major decision level at $2.45K–$2.55K, where long-term bids previously stepped in. On the other hand, any sustained recovery must begin with a reclaim of $3K and a close back above the 100-day MA to signal a meaningful shift in momentum.
The 4-Hour Chart
The 4-hour timeframe highlights the precision of the downtrend. The asset continues respecting the descending trendline originating from the $4.2K breakdown, and each retest of this trendline has generated new waves of selling. ETH has now reached the lower boundary of the descending channel while sitting inside the $2.7K demand block.
Short-term liquidity sweeps have been occurring on both sides of the range, indicating increasing volatility and the potential formation of a local bottom. If buyers defend the current channel low, the first upside target becomes the $3.05K–$3.15K imbalance region, followed by a more significant test of the $3.45K supply area. Without a clear breakout above the trendline, however, any rebound is more likely to remain corrective rather than structural.
Onchain Analysis
By Shayan
The two-week liquidation heatmap reveals that ETH is surrounded by dense liquidation clusters above the current price, particularly between $3.1K and $3.6K. These zones reflect the heavy accumulation of short positions and forced exits during the recent drop.
Historically, when price enters a deep liquidity vacuum below major clusters, markets often overshoot to the downside before staging a volatile rebound as liquidity above price becomes the next target.
Currently, clear liquidity voids sit above $3.2K, matching the major daily fair value gap. These areas tend to act as magnets during rapid corrections. With liquidity compressed below and large unfilled pockets above, ETH is approaching a pivotal zone. A temporary capitulation into the lower demand region cannot be ruled out, but this same motion has historically preceded strong recovery phases once exhausted sellers are cleared.
