Can Ethereum Survive the US-China Shock? Key Levels to Watch This Week

Ethereum’s native token, Ether (ETH), broke below the key support level at $4,000 on Tuesday, amid a broader risk-on market decline led by China’s retaliation to the US in the ongoing trade standoff.

The second-largest cryptocurrency was down 8.79% during the European session, falling to as low as $3,888. That is still up 13.21% when measured from the weekend low of $3,435.

China–US Trade Escalation Sends Global Markets Lower

Global markets turned risk-off on Tuesday after China escalated its trade retaliation against the United States.

Beijing placed restrictions on five US entities linked to South Korea’s top shipbuilder, signaling that it’s prepared for a prolonged standoff with Washington.

The move rattled investor sentiment across Asia and Europe.

All members of the “Magnificent Seven,” including Apple, Microsoft, Amazon, Nvidia, Alphabet, Meta, and Tesla, traded lower in US premarket hours, reflecting broader fears of disrupted supply chains and slowing global growth.

European markets were quick to follow, with the Stoxx 600 index slipping 0.9% by midday as traders rotated out of equities and into perceived safe-haven assets like the US dollar and Treasurys.

In crypto markets, the sell-off extended to risk assets such as Ethereum and Bitcoin, which typically mirror global equity trends during macro shocks.

ETH Holds Within Bull Flag, Eyes $5.5K on Potential Breakout

On the 3-day chart, ETH appears to be consolidating within a textbook bull flag pattern, a continuation setup that often precedes another upward leg.

The flag has formed following a steep rally from mid-August lows near $2,800 to September highs around $4,450. Prices have since oscillated between converging trendlines, reflecting temporary cooling in momentum rather than trend reversal.

As long as ETH holds above its 50-day exponential moving average (EMA) near $3,745, the pattern’s structure stays intact.

A breakout above the flag’s upper boundary could trigger a sharp move toward $5,500, aligning closely with the 1.618 Fibonacci extension level drawn from the previous swing. Such a move would represent nearly a 40% upside from current levels, reinforcing the case for a sustained bullish cycle.

Conversely, a decisive breakdown below the lower flag trendline could delay the breakout, potentially sending ETH toward $3,470, the 0.786 Fib retracement level, for another liquidity test before buyers re-emerge.

Until then, Ethereum’s price action remains coiled, hinting that a major directional move may be imminent.