Ethereum Struggles to Regain Footing as Price Hovers Near Key Support
Ethereum is facing headwinds in its attempt to regain upward momentum, following a failed breakout earlier this week that sent its price back towards the $2,200 mark. Currently trading around $2,250, Ether is being supported by a critical short-term level that could determine whether the market stabilizes or continues its downward correction. Compounding these concerns, network activity between user wallets has seen a significant drop from its mid-2026 peaks, offering little indication of renewed demand.
Technical Breakdown: Daily Chart Signals Weakness
Analysis of Ethereum’s daily chart reveals a breach of the ascending channel that had propelled the price upward from its June lows near $1,500. After reaching a peak close to $2,800 in late September, ETH experienced a decline, crossing the channel’s midpoint and ultimately breaking below its lower boundary in late October. This pattern points to a clear deterioration in the medium-term market structure.
A subsequent rebound saw the asset retest the $2,500 supply zone, which now coincides with the breached lower trendline. However, sellers successfully repelled this advance, confirming that the former support level has transitioned into resistance. Ether is currently holding the $2,200 support, a level that marked the low in late October. For a bullish case to be re-established and to bring the $2,800-$3,000 supply zone back into focus, buyers would first need to reclaim the $2,500 level.
Conversely, a decisive daily close below $2,200 would validate the channel breakdown, potentially exposing the $1,850 demand zone – the area of consolidation that preceded the sharp rally in August. Should this level fail, the $1,500 region remains a significant floor, having served as the base for the entire recovery that commenced in June.
Short-Term Outlook: Descending Channel and Fake Breakout
On the 4-hour chart, Ether has been trading within a descending channel since early October, characterized by a series of lower highs and lower lows. Earlier this week, the asset briefly surged above the channel’s upper boundary, reaching towards $2,500. However, this move was swiftly reversed by a sharp sell-off, pushing the price back within the structure. This “fake breakout” trapped late buyers and has reinforced a bearish short-term outlook.
Ether is now consolidating just above the $2,200 demand zone, which has successfully absorbed two sell-offs in recent weeks. If buyers continue to defend this level, a relief bounce towards the upper channel boundary, around $2,300, could materialize. To invalidate the failed breakout and target the $2,700 order block, Ether would need to decisively reclaim this trendline and subsequently the $2,500 level.
On the other hand, a breakdown below $2,200 would likely drive the price towards the channel’s lower boundary, near $2,000. Repeated tests of this support increase the risk of a failure, and the short-term structure continues to favor sellers unless the upper trendline is decisively broken to the upside.
Network Activity Declines Amidst Price Uncertainty
The “Transactions Between EOA” metric, tracked by CryptoQuant, monitors transfers between externally owned accounts – wallets managed by private keys, distinct from smart contracts and exchanges. Its 30-day exponential moving average serves as an indicator of direct peer-to-peer network usage, with rising figures typically reflecting increased user activity.
This indicator saw a steady climb from approximately 400,000 in early 2024 to around 600,000 by late 2025, before surging to nearly 1.3 million in the first half of 2026. Notably, this expansion occurred while ETH’s price was falling towards $1,500, demonstrating that network activity and price do not always move in tandem. It also suggested a significant shift in ETH holdings during the formation of price lows. Since August, the metric has fallen sharply to approximately 560,000, nearing its lowest levels of the past year, and is only now showing signs of stabilization.
While this reading should be approached with caution – as transaction counts can be influenced by low-value automated transfers and fee conditions, and do not directly measure buying demand – the significant contraction in wallet activity, coupled with the loss of the daily channel, suggests a lack of strong catalysts in the market. This leaves the $2,200 support level as the crucial line for buyers to defend.
