Ethereum is demonstrating a liquidity trap price pattern reminiscent of the setup observed in July, potentially signalling another imminent upward breakout as market positions are realigned. The recurring pattern involves an initial false breakout followed by a sharp reversal, effectively trapping both bullish and bearish traders in volatile whipsaw movements.
Market analyst Merlijn The Trader highlights that Ethereum has restaged its July liquidity trap by triggering cascading liquidations of leveraged positions on both sides of the market. The asset’s recent climb past the $3,800 threshold was partly fueled by forced buy-ins from short sellers, mirroring the previous trap-and-breakout structure that triggered July’s surge.
This price action combines technical positioning squeezes with behavioral market forces. Forced short covering may converge with renewed momentum trading and FOMO-driven inflows to potentially ignite another significant rally phase. Concurrently, Ethereum’s reclamation of major technical resistance zones creates constructive conditions for sustained upward continuation.
The cyclical pattern echoes dynamics that previously propelled explosive price appreciation, though market participants remain watchful for confirmation. If the historical analogy holds, ETH could see accelerated buying as trapped positions unwind and upside momentum builds.