Ether is entering a decisive trading week after recording its highest weekly candle close in over four years, with price action currently trapped between two critical liquidity zones, driving price fluctuations of over 11%.
On the downside, ETH recorded a low on Monday at $4,224, which put the focus on the $4,150 level, a support zone reinforced by multiple liquidity lows. Just below is a fair value gap around $4,000, which aligns with the Fibonacci retracement range of 0.50-0.618 between $4,100 and $3,900. This confluence suggests an attractive area for swing traders to place their bids.
The Kiyotaka trading platform highlights this area as a "giant stack of resting offers up to $3,900," making it a critical range to consider for liquidity-driven stop loss searches and possible reversals.
On the rise, Ether faces a group of immediate liquidity near $4,400, the imbalance formed during Monday's lows, which could act as a short-term magnet before a possible pullback. A sustained bullish reaction at this level could push ETH towards $4,583, a resistance on a higher time frame.
A confirmed breakout and stabilization above this level would strengthen the likelihood of a new all-time high in the coming days, extending the coin's multi-week bullish momentum.
From a structural standpoint, a new deeper test near $3,900 may be the most constructive scenario for bulls, as it would clear out initial long positions and feed liquidity for a stronger recovery towards $4,500 and new highs in the fourth quarter.
Meanwhile, the four-hour relative strength index (RSI) remains below 50, suggesting there is room for further decline before ETH enters oversold territory and prepares for a potential bullish breakout.
Despite short-term liquidity battles, the broader outlook for Ether remains firmly bullish, backed by record institutional inflows and a favorable technical context.
Last week, U.S. spot Ether ETFs recorded net inflows of nearly 649,000 ETH, the highest weekly figure on record. While ETH briefly touched $4,740 before a pullback over the weekend, the momentum from the inflows highlights strong institutional demand.
Market analysts have also become increasingly optimistic about Ether's positioning relative to Bitcoin. Bloomberg's senior ETF analyst, Eric Balchunas, describes Ether ETFs as key to turning Bitcoin into the second-best crypto asset in July, granting it the ETF of the Month category following unprecedented interest from investors.
On the technical front, traders are targeting Ether's multi-year bullish pennant, a "sleeping setup" that is now nearing breakout territory.
According to prominent trader Merlijn, every dip has been met with smart money accumulation, and weak hands have been shaken out during previous consolidations.
The long-term projection for ETH anticipates a pullback towards the $3,000 to $3,500 range before ETH embarks on a rally beyond $8,000, marking what could be the beginning of a new chapter in Ether's price history.
