Ethereum (ETH) is trading at a critical technical juncture, with price action compressing into a decisive pattern that signals an imminent breakout. Following an aggressive sell-off that pushed ETH toward the $1,800 support region, the market has entered a phase of choppy consolidation. On the daily chart, ETH continues to trade within a broader descending channel, with the $1,800 zone acting as a firm structural base and the channel's midline serving as dynamic resistance.
The most pressing development is the formation of a bearish pennant pattern on the daily timeframe, as highlighted by analyst Ted Pillows. This pattern emerged after ETH's decline from the $2,600 region and is characterized by converging trendlines. Technical analysis suggests such formations often act as continuation patterns within a downtrend. The key levels defining the next major move are a daily close above $2,100, which would invalidate the bearish structure and potentially open a path toward $2,400, and a daily close below $1,850, which would confirm a bearish continuation and expose lower support zones near $1,700.
On the 4-hour chart, the compression is even more evident, with ETH forming a clear triangle pattern approaching its apex. The structure reflects significant volatility contraction. A confirmed breakout above this triangle, followed by a reclaim of the $2,396 Fibonacci level, could shift short-term momentum toward targets between $2,549 and $2,767. Conversely, a breakdown below the triangle's ascending support would re-expose the $1,800–$1,746 base.
Market data provides mixed signals. The Taker Buy/Sell Ratio has remained below 1.0, indicating dominant selling pressure, though a recent rebound suggests it may be weakening. Crucially, Ethereum exchange reserves have declined steadily over two years, dropping from over 22 million ETH to roughly 16.4 million ETH, even during recent price weakness. This suggests a lack of heavy spot-driven selling from large holders. Meanwhile, aggregated futures open interest has reset from peaks of $45–$48 billion, indicating excess leverage has been cleared, reducing the risk of immediate liquidation cascades but leaving room for new positioning.
Institutional demand, however, appears soft. Ether ETF flows have turned negative on a monthly scale since late 2025, indicating weaker appetite from that investor cohort. A sustained upside move toward $2,400 may therefore require a stabilization or reversal in ETF demand alongside any technical breakout.
