u.today
One of the most brutal, yet telling, fakeouts we have seen in weeks was just delivered by Ethereum. Bulls briefly believed that a breakout was in progress as the price pushed straight into the intersection of key resistance levels (the 50 EMA, 100 EMA and the general downtrend structure).
Ethereum's price review
Rather, $ETH was hit hard almost immediately, rebounding under important averages and rejecting close to $3,500. Such a move is not haphazard, rather, it is an aggressive test of market conviction, coupled with a liquidity grab. The subtlety is that such a fakeout typically occurs close to the conclusion of a rally leg, rather than at the start. It clears stop levels, exposes weak hands and drives out impatient traders.
However, it also puts pressure on bears because, if $ETH maintains its higher-low structure following such a strong rejection, it indicates that demand below is still robust enough to sustain the market. $ETH is currently trading close to the mid-$3,100s, just above the area that served as a starting point for the previous 10-day increase. It will be very important.
Even if buyers defend it, the larger structure still supports continuing. There is no mass exit, just a pullback following an overextension, the RSI stays neutral and the volume is not displaying panic.
Two scenarios
Scenario 1: Rally continues
The market may try another push above $3,450-$3,500 if $ETH stabilizes above $3,100 and starts to grind back toward the 50 EMA. Clearly breaking that level would create a path toward the psychological $4,000 zone and pave the way for a more extensive reversal. After that, the fakeout turns into a spring, which is a typical setup for a longer bullish leg.
Scenario 2: Breaks in momentum
The recovery trend weakens if $ETH drops below $3,050 once more. The macro setup is delayed, but not destroyed, by that. Bulls would have to retest $2,900 in order to rebuild their structure from lower levels.
$ETH’s upward trajectory has not stopped, despite the messy performance. The market has not collapsed, despite the harsh fakeout. The rally can undoubtedly continue if buyers hold the line.