Ethereum has dropped to $2400 after failing to hold gains above the rising red channel from May.
RSI divergence appeared as ETH formed higher highs while momentum made consistent lower peaks recently.
The price now rests on a diagonal support and traders are watching $2855 for a possible reversal setup.
Ethereum has broken its rising channel structure and now tests a key diagonal support near the $2,400 zone. The move follows a failed attempt to break resistance at $2,855.47, leading to a steady downtrend over several sessions. The 4-hour chart indicates the breakdown occurred after a clean rise above the descending wedge formed between March and April 2025.
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Currently, Ethereum trades at $2,400.92. This marks a steep drop from its recent high of over $2,855, suggesting weakening upward momentum. Traders have turned cautious as the Relative Strength Index (RSI) on the chart forms a bearish divergence from the recent price trend.
The pattern indicates potential exhaustion in buying strength, which may keep Ethereum under pressure unless strong demand reappears. With price now testing the lower trendline, one question stands out: can ETH hold this support or is a deeper correction underway?
Divergence Signals Weak Momentum at Local Highs
The RSI indicator on the 14-period 4-hour chart sits near 32.57, indicating that Ethereum is approaching oversold conditions.
Despite this, RSI shows a divergence pattern. While price formed higher highs in early June, RSI formed lower peaks. This negative divergence suggests a lack of follow-through in bullish momentum. These divergences often precede sharp pullbacks or reversals. The downward sloping red line on the RSI chart makes this pattern clear. It visually contradicts the upward price movement.
Ethereum’s recent rally attempted to break through the $2,855 level. This level has acted as resistance in prior months as well. The price action within the rising red channel failed to generate a breakout, leading to a rejection and decline back to trendline support. This support trendline has been active since late April. It intersects current price action and provides a make-or-break level for ETH bulls.
Failure to hold above $2,400 could expose Ethereum to previous support zones near $2,100 or even the $1,800 range. Until bullish momentum returns or RSI confirms reversal, short-term risk remains elevated for ETH traders and investors.
Long-Term Pattern Suggests Future Rally if Support Holds
Despite the recent decline, the broader structure from March still shows a recovery from a steep downtrend into an upward formation. ETH had previously broken out from a downward wedge shown in green, recovering from lows below $1,600 toward nearly $2,900. The chart's projected path in blue shows a potential bullish reversal if current diagonal support holds, possibly targeting $4,000.
However, confirmation requires reclaiming the $2,855 level and breaking above resistance to form a higher high structure. The potential bullish case remains valid only if Ethereum defends this key trendline and reverses within the next few trading sessions.
If price closes below the current green support trendline, the risk of cascading losses increases due to a lack of immediate demand. As it stands, ETH is trading in a critical zone, and the coming hours will determine whether it regains upward direction or shifts downward.
