Despite Ethereum (ETH) recently breaking through the psychological barrier of $4000, trading between $3980 and $4080 on October 27, the upward momentum has clearly slowed down. Analysts point out that short-term technical indicators have shown multiple bearish divergence signals, and if market sentiment deteriorates and key support levels are breached, ETH may initiate a significant correction.
01 Short-term bearish signals accumulate
The trading upward momentum has slowed down, and technical indicators show signs of fatigue.
On the 4-hour chart, Ethereum has achieved consecutive bullish candles accompanied by increased volume, successfully breaking through the resistance level of $4050. However, it has formed a short-term double top structure near $4080, significantly suppressing further upward momentum.
Mr. Coin’s analysis suggests that the current "upward trend rhythm is slowing down, and it is recommended that everyone be cautious in pursuing more."
From a technical indicator perspective, the MACD has turned green for the first time after forming a golden cross, but multiple top divergence signals have appeared in the short term, which usually indicates a lack of upward momentum. At the same time, the 1-hour RSI has entered the overbought zone (reaching 71) and is showing signs of flattening.
Yun Yan also supports this viewpoint in his analysis, pointing out that "although the current market shows a strong bullish trend, it has reached the previous resistance level, and subsequent operations suggest shorting at high positions!"
02 Key Support and Downward Target
Pay attention to the support at 3980 USD, a loss may trigger a chain reaction.
According to Mr. Coin’s analysis, $3980 is a crucial support level in the short term. As long as the pullback does not fall below this area, the short-term oscillating upward pattern may continue.
However, once this support level is effectively broken, the next support area will move down to $3950.
If the market continues to deteriorate, prices may further drop to the $3850 to $3800 range. The $3850 level mentioned by several analysts is an important psychological and technical support.
A more pessimistic scenario is that if Ethereum loses all key support, it may trigger a deep correction, ultimately testing the $2850 area. This target level is derived from measuring recent volatility ranges and technical patterns.
03 On-chain Data and Market Sentiment
Whale behavior is contradictory, and market sentiment is diverging.
In the market adjustment in October, Ethereum whales (addresses holding between 100 and 10,000 ETH) showed significant selling behavior.
Data shows that during the period from October 5 to 16, these large holders sold approximately 1.36 million Ether, causing the price to rapidly drop from a high of $4,740 to a low of $3,680.
Despite these addresses repurchasing 218,470 ETH in the past week, it only accounts for about one-sixth of the previous sell-off, indicating that the confidence of large investors remains limited.
At the same time, analysts have shown a clear divergence in their views on the medium to long-term trend of Ethereum. Some analysts still insist that Ethereum may reach between 7000 and 8000 dollars before December, while analysts like Ali Martinez believe that the target of 10000 dollars may not be achieved until 2028.
The divergence of this analytical perspective itself also increases the uncertainty in the market.
04 Comparison of Ethereum and Bitcoin Performance
The ETH/BTC trading pair shows strong momentum, which may limit the depth of the Ethereum decline.
Interestingly, in contrast to the potential weakness of the ETH/USD trading pair, the ETH/BTC trading pair shows a strong upward trend.
Technical analysis shows that ETH/BTC is in a "strong bullish trend" on the 1-hour timeframe, with 85.71% of short-term technical indicators giving bullish signals.
This trend indicates that Ethereum is gaining strength relative to Bitcoin. If this relative strength can be maintained, it may somewhat alleviate the downward pressure on the ETH/USD trading pair, preventing the worst-case scenario.
05 Risk Management and Trading Strategies
Respond cautiously to fluctuations and strictly control risks.
In the current market environment, Mr. Coin advises traders to "cautiously chase longs" regardless of how confident they are in their market judgments, and "profits and stop-losses must be managed well." This is a key measure to cope with potential significant volatility.
For short-term trading, Yunyan suggests considering "shorting at high positions" in the $4070 to $4100 range, with a target set at $4000 to $3950 and a stop loss set above $4150.
Mr. Coin provides a more detailed strategy: "Short lightly at 4085-4130, stop loss 30 points, target below 4000"; "Long at 3861-3911, stop loss 30 points, target above 3920."
If the price falls below the support level of 3980 USD, investors should be wary of the risk of further declines to 3850 USD or even lower levels. In this scenario, reducing long positions or considering appropriate hedging strategies is a wise choice.
Future Prospects
The market always oscillates between fear and greed. Currently, Ethereum is at a critical technical decision point; whether it breaks upward to start a new bull market or pulls back to the $2850 region depends on the defense of several support levels.
Despite the short-term risks leaning downward, the fundamental factors for Ethereum in the medium to long term— including ETF inflows, institutional accumulation, and network development—still provide a solid foundation for it.
For savvy traders, possible deep pullbacks may present a good opportunity to accumulate chips, but the key is to strictly control risks and avoid being washed out of the market during sharp fluctuations.
