ETH was recently rejected near the all-time high around 4,783, with the next key support zone located in the 3,700–3,800 area. This resembles a blow-off structure where price fails to sustain a new high.
Short-term oscillators are stretched to extremes: RSI(6) ≈ 88.47, RSI(8) ≈ 85.07, and Stochastic K ≈ 91.26. Such readings suggest a high probability of mean-reversion.
Momentum is weakening despite the high print. The MACD histogram is fading and volume does not confirm the breakout, signaling a classic bearish divergence.
Market positioning increases downside risk: funding rates remain elevated and the crowd is heavily skewed long, leaving the market vulnerable to a potential long squeeze.
Proposed short setup
Entry zone: 4,470–4,500, ideally on a relief rally into supply
Take profit target: 3,700–3,800 (key support confluence)
Stop loss: 4,800 (above prior ATH; invalidates the pullback thesis)
Execution considerations
Scale into partial size within the 4,470–4,500 zone; add only if lower time frame signals confirm weakness.
If price breaks below 4,400 without a retest, avoid chasing and wait for a pullback into broken support.
Position sizing should be calibrated to ATR and account risk, with a hard stop above 4,800 to eliminate tail risk.
This is a short-term tactical trade based on momentum and positioning; the broader trend remains constructive as long as higher highs and higher lows are preserved.
Risk management
Always use a stop-loss and adjust size so the stop does not exceed portfolio risk limits.
Avoid initiating during compressed volatility ahead of major events.
Monitor funding, long/short ratios, and liquidity in the 3,700–3,800 region to decide whether to extend targets or secure early profits.
In conclusion, the short thesis is supported by rejection at ATH, extreme overbought conditions, bearish divergence, and positioning prone to a squeeze. The setup is valid only while price remains below 4,800 and should be executed on rallies, with targets at 3,700–3,800 and disciplined risk control.
