ETH/USD Daily Chart (Coinbase) – Source: TradingView

If this retest results in a rejection of a move above $4,000 and ETH is pushed below $3,700, this could mark the beginning of a bearish cycle for the token, as the technical setup indicates that the token’s latest consolidation phase was resolved to the downside.

Moreover, if negative momentum gains traction, we could see ETH plunging to $2,600 in the near term, as this was the nearest area of accumulation where the market may find strong interest again.

The Relative Strength Index (RSI) is about to send a buy signal upon crossing the 14-day moving average. If that happens, and ETH rises past $4,300 or so, this would invalidate the bearish outlook shared above, as it means the token will climb back above its trend line support.

In this case, this latest move downwards will turn into a bear trap and could set the stage for a short squeeze that could finally push ETH above $5,000.