(MENAFN- Crypto Breaking) Crypto markets experienced notable volatility on Tuesday as Ethereum (ETH ) faced a sharp correction, dropping over 8%. Despite this dip, analysts remain cautiously optimistic, viewing the move as a technical pullback within a broader upward trend that could set ETH on course for a new rally toward $10,000. As traders digest Ethereum 's latest price action, key support levels and technical patterns are being closely monitored for signs of a continued uptrend.

• Ethereum's price plunged by more than 8%, triggering approximately $115 million in long liquidations.
• The formation of a bullish flag pattern suggests a potential move toward $10,000, provided crucial support levels hold.
• Despite recent corrections, technical indicators hint at a possible breakout, with Ethereum targeting significant gains in the coming months.

Ethereum (ETH ) saw its price descend from Monday's highs above $4,300 to a low of $3,940 on Tuesday. While the correction weighed on traders' spirits, confidence remains that ETH's long-term trajectory is upward, contingent on the ecosystem retaining key support levels.

Ether Wipes Out $115 Million in Long Positions

The decline was accompanied by widespread liquidations across the crypto space.

Data from CoinGlass indicates over $650 million worth of leveraged crypto positions were liquidated in the past 24 hours, with $455 million stemming from long positions.

Related: BitMine boosts ETH supply by 200K amid aggressive post-crash buying

Specifically, liquidations of long ETH positions totaled approximately $114.5 million, a figure that continues to grow as the market reacts to recent price drops.

Ether liquidation heatmap. Source: CoinGlass

The largest liquidation order involved an ETH/USD position worth $5.5 million on OKX , highlighting the scale of leveraged traders caught off guard by ETH's decline below $4,000.

The CoinGlass liquidation heatmap revealed several buy orders below the current price, particularly between $3,670 and $3,800, indicating that strong support could limit further downside.

ETH liquidation heatmap. Source: CoinGlassMarket Outlook: Is the Downtrend Over?

Some analysts see the recent correction as a necessary retest of support before a renewed rally. MN Capital founder Michael van de Poppe noted that ETH/BTC pair's drop to 0.032 was an ideal entry point for buyers.

“ETH hit an ideal zone for buys and looks poised for a trend reversal,” van de Poppe stated on social media, adding,“A higher low would set the stage for new highs.”

Meanwhile, Daan Crypto Trades pointed out that although the ETH/BTC pair has held support at 0.032, a breakout above 0.041 is needed to confirm a sustained uptrend.

On the USD side, the relative strength index (RSI) broke out of a multi-year downtrend, suggesting that a bullish move could be imminent. If historical patterns repeat, Ethereum's price could surge toward $8,000–$10,300, based on Fibonacci extension levels.

On the downside, Ethereum could find support around $3,800, as suggested by analyst Chimp of the North. His chart indicates a potential retest of this level before a possible rally past $5,000. The recent stabilization in Ethereum futures markets hints at an imminent bounce back, with some forecasts projecting Ethereum returning to $4,500 over the next few days after Friday's crypto flash crash.

Technical Patterns Point Toward a Bullish Breakout

Ether 's price continues to trade within a prominent bull flag pattern on the weekly chart, a sign of consolidation after a sharp rally and a potential precursor to further gains.

The immediate support is at $3,870, with the upper boundary around $4,440. A break above this resistance could propel ETH toward a target of approximately $10,050 - representing a 164% increase from current levels.

ETH/USD four-hour chart. Source: TradingView

The RSI has cooled from 74 to 54, suggesting that while the correction may persist in the short term, a strong bullish move remains feasible. A daily close below $3,800 could signal further declines toward the 20-week SMA at $3,700 and potentially as low as $3,500.

This analysis is not investment advice. Cryptocurrency trading involves risk, and individuals should conduct thorough research before acting on market moves.

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