Ethereum’s Ongoing Correction Phase
Ethereum remains entrenched in a correction phase. Recent attempts at recovery have not shown the strength required to break past significant resistance levels. Even though the downward momentum appears to be waning, the demand necessary for a sustained bullish trend is still lacking.
On the daily chart, ETH continues to linger below a dominant downtrend line that has capped its movement since November’s peak. Each recovery effort seems to hit a wall, reinforcing a broader corrective trend.
The asset is currently hovering around the $31,000 mark, falling below both the 100-day and 200-day moving averages. The 200-day moving average, which sits between $3,400 and $3,500, coincides with a major supply area that has historically acted as a point of distribution, contributing to ongoing selling pressures.
The most critical resistance lies within the $3,300 to $3,600 range. A daily close above this area is necessary to challenge the current bearish structure and hint at a potential trend reversal. Until that happens, any upward movements are likely to be viewed as temporary corrections.
Looking at the downside, the $2,600 to $2,500 demand zone stands out as a key support area. This level represents a solid bullish foundation early in the cycle and is situated near the market’s lower bounds. Revisiting this zone would align with the ongoing structural adjustments.
On the 4-hour chart, Ethereum is operating within an upward correction channel that is nested in a broader downtrend. While short-term higher lows have developed, the asset remains hindered by both the downtrend line and a local supply zone around $3,300 to $3,400.
Recent price behavior shows repeated rebounding from this resistance area, followed by relatively small declines rather than significant drop-offs. This could indicate a lack of genuine buying pressure and instead points to absorption.
If Ethereum can’t decisively reclaim the $3,300 mark, the next liquidity target could be the psychological $3,000 level, followed by a support area near $2,900 noted on the chart. A breakdown of the ascending channel would raise the chances of a deeper retracement toward the daily demand zone.
A definitive break above the downtrend line with strong follow-through is needed to shift short-term momentum in favor of buyers.
Looking at the on-chain analysis, the Binance ETH/USDT Liquidation Heatmap offers insights into where leveraged positions are clustered and how the price may interact with these liquidity pools. Over the past month, this heatmap has indicated a dense cluster of liquidation levels above current prices, especially between $3,400 and $3,700.
This concentration suggests numerous short positions exist in this range, becoming attractive for assets if enough momentum builds. However, Ethereum has consistently struggled to make that decisive move, indicating a lack of active demand that could trigger a significant short squeeze.
Below the current levels, there’s been a thinning of liquidation density, with a new cluster appearing around the $2,700 to $2,600 range. This imbalance implies there might be less resistance to downward movements in the short term, potentially leading to liquidity-driven declines before any meaningful upward gains can be made.
Historically, Ethereum tends to gravitate toward areas with high liquidation concentrations when momentum builds. At this moment, the market structure and liquidation profile indicate that weaker long positions may need to be resolved first before any significant price increases can occur.
Until the highlighted liquidation clusters are actively engaged and liquidated, Ethereum will likely continue to experience a range-bound or corrective price action, rather than a clear breakout into bullish territory.
