Ethereum Price Analysis: This Support Stands Between ETH and a Sub-$3.5K Drop

Ethereum has been showing signs of weakness after failing to reclaim the key $4,200 ￰0￱ strong bullish momentum earlier this month, price action remains capped within a descending channel, and the recent bounce has been relatively ￰1￱ are now watching to see whether ETH can establish a higher low or if further downside is to ￰2￱ Analysis By Shayan The Daily Chart Ethereum continues to respect the boundaries of the descending parallel channel, with multiple rejections from the upper ￰3￱ most recent attempt to break out near $4,200 failed, sending the price back toward the mid-range and testing support around $3,700. The asset is still holding above the 200-day moving average for now, which is a critical dynamic support level, but we’re now seeing lower highs form, which is a sign of weakening bullish ￰4￱ RSI on the daily has also dropped to around ￰5￱ reflects a cooling off in buying pressure without yet entering full oversold ￰6￱ ETH loses the $3,700 support, the next major demand zone lies around $3,400, where the lower channel support and a horizontal level intersect.

However, if buyers can reclaim the $4,000 region, another test of the $4,200 level would be very ￰7￱ 4-Hour Chart On the 4-hour chart, the picture becomes more ￰8￱ the recent rejection from $4,200, ETH saw a sharp drop into the lows of the range, which was swept before a small bounce ￰9￱ price is currently hovering around $3,800 and attempting to reclaim ￰10￱ RSI also hit oversold territory and has now started turning up, indicating a potential short-term relief rally or range-bound ￰11￱ the small bounce, ETH remains under the key resistance zone at $4,000. This area will be crucial, as a clean break and close above it would signal renewed buyer ￰12￱ then, short-term rallies may face selling ￰13￱ the current bounce loses steam, ETH could revisit the $3,650 low or even test the $3,400 demand zone, aligning with the bottom of the larger descending ￰14￱ Analysis Open Interest Open Interest on Ethereum has seen a significant reset, falling sharply from over $32 billion down to around $22.8 ￰15￱ drop reflects a broad deleveraging across the market, likely triggered by a combination of stop hunts, liquidations, and risk-off behavior from ￰16￱ rapid flush of open positions suggests that many overexposed longs were forced out, especially after ETH’s rejection from the $4,200 resistance ￰17￱ a sharp OI decline is often a necessary clean-up to reset overheated ￰18￱ leverage builds up too aggressively, markets tend to shake out weak hands before establishing a more stable trend.

That’s what appears to have happened here. However, what’s notable is the current stagnation, as open interest has not rebounded with price, which signals that traders are still hesitant to re-enter in size.