Have you ever watched a coin rip 15-20% in a couple of days and felt that little voice in your head whispering “trap”? Yeah, me too. Right now Ethereum is doing exactly that – blasting from the $2,800 zone all the way to $3,333 and change, making everyone who missed the bottom feel a serious case of FOMO. But the closer you zoom in, the uglier the picture gets. This isn’t some clean impulsive breakout. It’s a textbook rally into supply, and the bears are licking their chops.
The Resistance Cluster That Refuses to Budge
Let’s start with the obvious. Ethereum is currently banging its head against one of the densest resistance zones we’ve seen all year. Think of it like trying to drive through a brick wall that’s been reinforced three times over.
Sitting right around $3,375–$3,450 we have:
- The 0.618 Fibonacci retracement of the entire decline from the local top
- The daily and weekly VWAP acting as dynamic resistance
- A massive bearish order block formed when price wicked above $4,000 back in March and got viciously rejected
- The 200-period moving average on the 4-hour chart that has rejected price three separate times already
In my experience, when you see this much confluence in one area, the path of least resistance is rarely straight up. Markets love efficiency, and grinding through all of that would take serious, sustained buying pressure – the kind we simply haven’t seen yet.
Market Structure Still Screams Bearish
Zoom out to the daily or weekly chart and the story hasn’t changed one bit. We’re still carving lower highs and lower lows. That’s the definition of a downtrend, no matter how much hopium gets pumped on Crypto Twitter.
The bounce we’re witnessing right now looks almost identical to the relief rallies we got in May and again in August – both of which failed spectacularly at similar Fibonacci levels and led to fresh lows. History doesn’t repeat, but it sure rhymes.
“Every bear market rally feels like ‘this is it’ until it isn’t. The ones that fail at the 0.618 golden ratio almost always go on to test the previous low or worse.”
– Veteran macro trader (anonymous)
Volume Tells a Worrying Story
One of the red flags I’m watching closely is volume. Yeah, we saw a nice spike when price reclaimed $3,000, but the follow-through has been anemic. Each push higher is on declining volume, which usually means diminishing conviction.
Compare that to the selling volume we saw on the drop from $4,000 – those were fat, ugly red candles with real participation. Distribution beats accumulation right now, plain and simple.
The $2,800 Level – Make or Break
If this rally is indeed just a dead-cat bounce (and I lean that way), then $2,800 becomes the line in the sand. That zone has acted as support multiple times this cycle and also aligns with the point of control from the yearly volume profile.
Losing it on a weekly closing basis would be devastating for bulls. We’re talking high-probability sweep of the $2,400 lows and potentially a retest of the $2,199 area that lines up with the next major Fibonacci extension and previous yearly open.
Frankly, I wouldn’t be shocked to see that happen before year-end, especially with Ethereum ETFs continuing to bleed. Zero inflows and consistent outflows do not scream “institutional demand” to me.
What Would Actually Flip Me Bullish?
Fair question. I’m not married to the bear case. Markets change, and I’ll change with them. Here’s what I need to see to consider the downtrend over:
- A decisive weekly close above $3,600 – that clears the bearish order block and the 200-week moving average
- Increasing volume on the breakout, not decreasing
- Bitcoin dominance rolling over (because ETH rarely leads in risk-off environments)
- Spot ETF inflows turning positive again
Until at least a couple of those boxes are ticked, I’m treating any move above $3,400 as a selling opportunity or at minimum a very high-risk long.
The Broader Crypto Context
Zooming out even further, Bitcoin itself is showing signs of exhaustion near its all-time highs. The Fed meeting this week could throw a curveball – another pause or hawkish cut might spark a risk-off move across the board.
When Bitcoin corrects, Ethereum usually gets hit harder. That’s been the pattern for years now. So even if ETH manages a short-term breakout, the macro setup doesn’t exactly scream “moon.”
Risk Management in This Environment
Look, I’ve been wrong before and I’ll be wrong again. But right now the risk/reward heavily favors caution. If you’re trading this move, consider the following:
- Tight stops above $3,450 if you’re shorting the resistance
- Partial profits on any retest of $3,000–$3,100
- Avoid leverage unless you have ice water in your veins
- Keep plenty of dry powder – the real opportunities often come after the shakeouts
I’ve found that the traders who survive cycles are the ones who respect structure over narrative. Right now structure is saying “proceed with extreme caution.”
Final Thoughts
Ethereum’s rally has been impressive, no doubt. But impressive rallies into major supply zones happen in bear markets all the time. Until we see conclusive evidence that buyers have taken control – higher highs, higher lows, expanding volume, and dominance shifting – I’m treating this as another lower high in a downtrend.
The next few days are going to be fascinating. Will $3,400 give way and invalidate the bear case? Or are we about to watch another textbook rejection and leg lower? Either way, the market is about to tell us who’s been swimming naked.
Stay sharp, manage risk, and remember – capital preservation is the only statistic that matters over a full cycle. Everything else is noise.
