Ethereum ($ETH) has been showing intriguing price action lately, with a notable bearish divergence emerging after a significant $1,200 upward run. According to trader Michaël van de Poppe, this divergence, coupled with the formation of a lower high, suggests potential caution for bulls. If $ETH aims to resume its upward momentum, a decisive break above the $3,800 resistance level would be crucial. Otherwise, a retreat to $3,400 could be on the cards, highlighting key trading opportunities for cryptocurrency investors monitoring ETH price movements.

Ethereum Price Analysis: Bearish Divergence and Key Levels

In his analysis dated July 23, 2025, Michaël van de Poppe pointed out that after Ethereum's impressive rally of $1,200, the asset formed a bearish divergence on technical indicators. This pattern often signals weakening momentum, even as prices push higher temporarily. Following this, $ETH established a lower high, which is a classic bearish signal in technical analysis. Traders should watch the $3,800 level closely as a potential breakout point. A successful breach here could invalidate the bearish setup and open doors for further gains, possibly targeting previous all-time highs. On the flip side, failure to break this resistance might lead to a correction, with $3,400 acting as a strong support zone based on historical price action. This setup provides concrete trading signals for both long and short positions in the ETH market.

Trading Strategies for $ETH Based on Current Patterns

For those engaging in Ethereum trading, consider the implications of this bearish divergence. If $ETH manages to surge past $3,800 with increased trading volume, it could signal a bullish continuation, attracting more buyers and potentially correlating with positive movements in related altcoins. Volume analysis is key here; look for spikes above average daily volumes to confirm strength. Conversely, if rejection occurs at $3,800, traders might position for a downside move toward $3,400, where on-chain metrics like active addresses and transaction volumes could provide additional support. Incorporating tools such as RSI and MACD can help validate this divergence, with RSI potentially showing overbought conditions post-rally. Remember, in the volatile crypto market, setting stop-losses around these levels is essential to manage risks effectively.

Broadening the perspective, this $ETH analysis ties into overall cryptocurrency market sentiment. With Bitcoin often leading the pack, any ETH weakness could ripple across the sector, affecting trading pairs like ETH/BTC or ETH/USDT. Institutional flows, as seen in recent ETF approvals, might bolster Ethereum's resilience, but retail traders should monitor whale activities on-chain for early signs of shifts. If $ETH drops to $3,400, it could present a buying opportunity for long-term holders, especially if broader market indicators like the Crypto Fear and Greed Index shift toward fear. Conversely, a breakout above $3,800 might fuel optimism, driving ETH price predictions higher. Always cross-reference with multiple timeframes, such as daily and 4-hour charts, to refine entry and exit points.

Market Correlations and Risk Management

Exploring cross-market correlations, Ethereum's performance often mirrors trends in the stock market, particularly tech-heavy indices like the Nasdaq, given ETH's role in decentralized finance and AI applications. If stock markets rally, it could provide tailwinds for $ETH, potentially aiding a break above $3,800. However, in a risk-off environment, correlations might amplify downside moves toward $3,400. For AI-related tokens, any positive ETH momentum could lift projects like those in the AI crypto space, creating arbitrage opportunities across trading pairs. To optimize trades, focus on liquidity in major exchanges and use limit orders around these pivotal levels. In summary, this bearish divergence setup demands vigilant monitoring, offering high-reward trading scenarios for prepared investors in the dynamic world of cryptocurrency trading.