Key Points:
The price of Ethereum dropped 8% on Tuesday to $3,940, triggering $115 million in ETH long liquidations.
The bullish flag pattern on the weekly chart suggests a target of $10,000, but bulls must first hold above $3,800.
On Tuesday, the ETH price showed a downward trend, pulling back over 8% from Monday's high of over $4,300, trading down to $3,940. Despite this pullback, analysts remain optimistic about the ETH price rising, provided that key support levels can hold.
Today's bearish performance of ETH coincided with a massive liquidation wave in the crypto market.
According to data from CoinGlass, over $650 million in cryptocurrency leveraged positions were liquidated in the past 24 hours, with $455 million being long liquidations.
The amount of ETH long liquidations reached $114.5 million, and this figure continues to rise as of the time of writing.
This indicates that long traders were caught off guard by ETH's drop below $4,000. The largest single liquidation order occurred on the OKX cryptocurrency exchange, involving an ETH/USD trading pair worth $5.5 million.
CoinGlass's liquidation heatmap shows several buy interest zones below the spot price, with buy units valued at over $743 million between $3,670 and $3,800. Market experts believe this data suggests that the current pullback may find effective support at this level.
Market analysts point out that the ETH price is undergoing a technical adjustment aimed at retesting key support levels, after which it will resume its upward trend.
Michael van de Poppe, founder of MN Capital, stated that Sunday’s drop brought the ETH/BTC trading pair down to 0.032, which constitutes an "ideal buying area."
"ETH has reached the ideal buying area, and I believe it is ready to change trend direction," van de Poppe wrote in a post on the X platform on Tuesday, adding:
Analyst Daan Crypto Trades noted that while the 0.032 level "is holding up well," the ETH/BTC trading pair needs to break above 0.041 to maintain its upward trend.
When analyzing the ETH/USD trading pair, Titan of Crypto indicated that the relative strength index (RSI) has broken a multi-year downtrend, suggesting a major breakout is imminent.
If this pattern develops similarly to July 2020, based on Fibonacci levels, the ETH price could continue its upward trend, targeting price levels between $8,000 and $10,300.
ETH breakout is loading…And it could melt faces pic.twitter.com/PPT2MXHd4H
According to the pseudonymous analyst Chimp of the North, the downside potential for ETH may be limited to $3,800.
The chart shared by this analyst shows that the altcoin may continue to pull back to test the $3,800 support level, before launching another rally towards $5,000 and above.
As reported by Cointelegraph, after stabilizing from Friday's cryptocurrency flash crash in the Ethereum futures market, ETH may return to the $4,500 level in the coming days.
From a technical analysis perspective, the ETH price remains within a bullish flag pattern on the weekly timeframe, which is a bullish setup formed by price consolidation in a downward range after a sharp rise.
ETH is currently retesting the lower boundary of the flag, now at $3,870, which constitutes immediate support.
Once the price breaks above the upper trend line at $4,440, the bullish flag pattern will complete its breakout, paving the way for a continuation of the upward trend, with a technical target of $10,050—a 164% increase from the current price.
On the other hand, the RSI has dropped from 74 to 54 over the past seven weeks, indicating that the current adjustment may extend as profit-taking continues.
If the daily candlestick closes below the $3,800 support level, the ETH price will face risks, potentially first dropping to the 20-week simple moving average (SMA) at $3,700, and then down to $3,500.
Related: $755 million flows out of U.S. spot Bitcoin (BTC) and Ethereum (ETH) ETFs after the crypto market crash
This article does not contain any investment advice or recommendations. Any investment and trading activities involve risks, and readers should conduct their own research before making decisions.
Original article: “Ethereum Drops 8%, But Traders Say ETH Price Breakout to $10,000 is ‘Loading’”
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