Ethereum News Today: Ethereum's Break Below $3,850 Sparks Caution as Technical Indicators Signal Potential Pullback

Ethereum’s price action has triggered renewed caution among traders following a breakdown from a well-defined rising wedge pattern, coupled with bearish RSI divergence and increased trading volume. The recent collapse below the $3,850 threshold—a key resistance level—signals a potential near-term pullback as technical indicators suggest weakening bullish momentum. This development has intensified profit-taking, with market participants closely monitoring critical support zones to assess the next directional shift in the cryptocurrency’s trajectory.

The breakdown from the rising wedge, which had formed since early July starting near $2,400, marks a classic bearish reversal pattern. Price failed to sustain above the wedge’s lower trendline, and the bearish RSI divergence—evidenced by higher highs in price paired with lower highs in the RSI—highlights a loss of upward momentum. After reaching $3,850, Ethereum’s RSI retreated from overbought levels above 80, indicating a cooling in buying pressure. This technical setup has prompted traders to reassess positions, with liquidity zones near $3,150 emerging as a focal point for potential long liquidations.

The $3,150 level represents a concentrated cluster of long positions and stop-loss orders, making it a pivotal support zone. A sustained decline to this area could trigger a cascade of sell-offs, accelerating downward momentum. While a successful hold above $3,150 might stabilize prices, a breach could open the path to deeper corrections. Historical support levels between $2,800 and $2,233 remain key targets should selling pressure persist. Traders are advised to monitor volume and order flow dynamics around these thresholds, as they may signal either a rebound or further deterioration in sentiment.

Technical momentum indicators reinforce concerns about a distribution phase. High-volume red candles accompanying the recent price drop suggest active profit-taking or position adjustments. The MACD, though still technically bullish with a reading of 309.60 against a signal line of 234.29, shows a sharp curvature and shrinking histogram, indicating waning upward force. This divergence between price action and momentum often precedes corrections or sideways consolidation. Immediate support now lies between $3,200 and $3,400, but sustained selling could erode these levels, testing the wedge’s lower boundary near $2,800.

While the broader uptrend remains intact, the current technical environment points to a period of consolidation or mild correction. The $2,630.16 zone—previously a resistance level in early July—could act as a short-term target if the pullback deepens. Further down, the $2,403.47 consolidation zone and the $2,233.80 long-term support level provide additional layers of defense against prolonged weakness. Investors are urged to balance optimism with prudence, as the market digests recent gains and reassesses risk-reward dynamics.

Overall, Ethereum’s breakdown from the $3,850 wedge, combined with bearish RSI signals and volume surges, underscores a cautious near-term outlook. The $3,150 liquidity zone will be critical in determining whether the correction stabilizes or extends toward lower support levels. Fading bullish momentum and distribution-phase indicators highlight the need for disciplined risk management. As technical signals evolve, traders must remain vigilant to navigate potential volatility in the coming weeks.