Ethereum Price Faces Critical Resistance: A Potential Dead-Cat Bounce?

Ethereum’s recent price movements have caught the market's interest once again, as the asset has bounced back from the $2,800 support zone, entering a significant resistance area. This rise has fueled discussions about whether this might be a genuine recovery or merely a temporary uptick, often termed a "dead-cat bounce."

Key Takeaways

Ethereum has recently rebounded from the $2,800 support zone, gaining market attention.
The current price surge faces major resistance at the $3,400 level, threatening the sustainability of the upward trend.
Analysts are cautious, fearing that this could merely be a short-term relief rally within an ongoing downtrend.
A failure to maintain above $2,800 could result in a sharper decline towards $2,199.

ETH price trading into resistance where a rejection can occur.

Ethereum's Recent Price Movements

Ethereum price rallies into resistance while bearish structure holds: Dead-cat bounce? - 1 ETHUSDT (1D) Chart, Source: TradingView

Ethereum’s bounce from the $2,800 support zone is one of the key highlights in recent trading sessions. This level traditionally acts as significant support, showing that buyers are willing to step in at this price point despite the selling pressure. Furthermore, the upward movement occurred alongside WisdomTree’s launch of Europe’s first fully staked Ethereum exchange-traded product (ETP), signaling growing institutional interest in Ethereum, even in the face of an overall downward trend.

However, Ethereum’s rally faces significant hurdles ahead. The asset has entered a resistance zone characterized by various technical barriers. The 0.618 Fibonacci retracement level intersects with the Volume Weighted Average Price (VWAP) resistance, and there is a bearish order block around the $3,400 mark, which adds to the resistance pressure. These levels form a historically strong rejection area, where the price typically struggles to advance.

If Ethereum cannot convincingly break through this resistance, it may simply be experiencing a “dead-cat bounce”—a brief recovery that precedes a continuation of the downward trend. This assessment is further corroborated by the prevailing market structure, as Ethereum continues to make lower highs and lower lows on longer time frames.

Should the current price levels encounter rejection, it would likely prompt a movement back towards the $2,800 support. The reaction at this point will be crucial; a robust defense at this level might stabilize the market structure. However, a significant fall below $2,800 on higher time frames would indicate a potential for a deeper decline.

The next major support level lies around $2,199, which correlates with previous liquidity zones and the next Fibonacci retracement. This is particularly relevant now considering that Ethereum ETFs have recorded $75 million in outflows with no new inflows, reflecting a decline in confidence around the $3,000 threshold. Such a decline would confirm a prevailing bearish trend, implying that any recent upward moves were only corrective.

Looking Ahead: What’s Next for Ethereum?

Ethereum stands at a critical juncture. A decisive break above the $3,400 resistance cluster would not only negate the dead-cat bounce hypothesis, but it would also open the doors to potential bullish momentum.

However, given the current trading volume, market structure, and trends, a rejection and subsequent pullback towards the $2,800 level seems the more likely scenario. If Ethereum fails to hold above $2,800, it may enter a more significant correction targeting the $2,199 region. Until there is a clear indication of a higher low and a shift out of the declining structure, caution remains essential despite any short-term recoveries.