Ethereum (ETH) price continues its downward trend, mirroring the broader cryptocurrency market downturn. With Bitcoin (BTC) slipping below $100K again, ETH has dropped 5% from last Friday's peak. Technical indicators suggest this correction may deepen—but how far could ETH fall?
Key Factors Driving Ethereum's Price Decline
1. Bearish RSI Divergence Signals Weakness
Since November 11, ETH price formed higher highs while the Relative Strength Index (RSI) created lower highs. This negative divergence historically precedes price drops, suggesting weakening buying pressure.
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2. Momentum Breakdown Confirmed by Awesome Oscillator
The Awesome Oscillator (AO) spent most of November above zero but recently showed declining momentum. When combined with BTC's slump, this creates perfect conditions for increased sell-offs.
3. Psychological Resistance at $4,000
ETH's retest of the $4,000 level triggered predictable profit-taking. Such key psychological thresholds often catalyze corrections before establishing new support zones.
Ethereum Technical Outlook: Potential Support Levels
| Price Level | Significance | Drop from Current |
|---|---|---|
| $3,900 | Immediate Demand Zone | -2.5% |
| $3,701 | First Strong Support | -9% |
| $3,518 | Monthly VAH/VWAP | -13.5% |
| $3,161 | Critical Long-Term Support | -22% |
The 25-day rally while RSI/AO declined signaled exhaustion. Current support tests will determine whether this becomes a healthy correction or transforms into a steeper decline.
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Bullish Scenario: Invalidation Conditions
Should ETH rebound from $3,800-$3,900 and break $4,087, the bearish thesis collapses. This could propel ETH toward:
- $4,500 intermediate target
- $5,000 psychological milestone
Frequently Asked Questions
What's causing Ethereum's price drop?
Three primary factors: RSI-price divergence, fading momentum per AO, and profit-taking at $4K resistance.
How low might ETH go?
Key levels to watch: $3,701 (9% drop), $3,518 (13.5% drop), or $3,161 (22% drop).
Could Ethereum reverse its downturn?
Yes—a clean break above $4,087 would invalidate bearish signals, potentially restarting the uptrend.
Why does $4,000 matter psychologically?
Round numbers trigger subconscious trader behavior, often serving as profit-taking points or breakout confirmation zones.
How reliable are these technical indicators?
While no tool predicts perfectly, RSI divergences coupled with momentum shifts have strong historical correlation with trend reversals.