After a sharp breakout above $3,000, Ethereum has rallied toward $3,800, fueled by strong momentum and bullish market conditions. The rally has pushed ETH to levels not seen since early 2025, flipping key resistances into support.

However, signs of short-term exhaustion are beginning to surface, raising the possibility of a cooldown phase before any continuation higher.

Technical Analysis

By ShayanMarkets

The Daily Chart

On the daily chart, ETH remains in a strong uptrend, holding well above both the 100 and 200-day moving averages, both located around the $2,500 mark. The recent breakout from the $2,800 zone has triggered a clean rally, with the price now trading around $3,660 after briefly touching $3,800.

The RSI peaked above 78, suggesting the move was heavily overbought, and it’s now beginning to cool down. A key level to watch is the $3,300 area, which acted as a breakout zone and could now serve as support if the price pulls back. As long as ETH holds above that level, the macro structure remains bullish.

However, the asset is stalling just below the $4,000 resistance, and the latest daily candles are showing upper wicks, indicating selling pressure. If the bulls fail to push past $3,800 with strength, we may see a deeper pullback into the $3,300 range, which would be a healthy retest before continuation. On the upside, the $4,107 previous highs remain the next major target, but a clean breakout and daily close above $3,800 is required to confirm the move.

The 4-Hour Chart

On the 4-hour timeframe, ETH has been showing bearish divergence between price and RSI. While the price pushed higher into $3,800, the RSI has been forming lower highs, suggesting that momentum is fading. The RSI has now dropped to around 50, showing a loss of short-term bullish pressure. The asset is currently consolidating inside a tight range between $3,500 and $3,800, with multiple rejections from the latter area.

A breakdown below $3,500 would open the door for a correction toward $3,200, which is the nearest strong support. That level also lines up with previous 4H structure and the origin of the recent move. Therefore, until ETH breaks above $3,800 with a convincing candle and volume, it’s more likely to consolidate or retrace in the short term as the market cools off.

On-Chain Analysis

Ethereum Funding Rates

From a sentiment standpoint, Ethereums recent rally has been supported by growing speculative interest, reflected in the rising funding rates across all major exchanges. Funding has turned positive and continues to climb, showing that long positions are becoming more dominant as traders chase the breakout. However, it’s important to note that despite this uptick, funding rates are still far from the extreme highs we’ve seen at major market tops in the past.

During previous cycle peaks, funding spiked aggressively, reaching levels that typically precede sharp corrections or long squeezes. Currently, funding remains relatively moderate, suggesting that although sentiment is turning more bullish, its not yet at a euphoric stage. This gives Ethereum some breathing room for further upside continuation as long as rates don’t escalate too quickly. Traders should still keep an eye on funding dynamics, as a sudden surge could be an early warning of overheating conditions.

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