Home Altcoins News Ethereum Faces $2.8K Resistance – Key Levels to Watch

Ethereum Faces $2.8K Resistance – Key Levels to Watch

Ethereum

Ethereum has been navigating a bearish market structure, with a notable resistance around the $2.8K zone, which has proven difficult to break through. This resistance level held strong from August to November 2024, and Ethereum has recently fallen below it, causing some concern among investors. While the price movement of Ethereum and other altcoins suffered significant losses in November, the current market scenario reveals that Ethereum’s price may be at a crucial point.

At present, the 61.8% and 78.6% Fibonacci retracement levels are continuing to act as support, but overall, the market structure remains bearish, with buying pressure having stalled. Despite this, there are key indicators suggesting that a short-term bounce towards $2,880 might occur. However, this move could potentially turn out to be a bull trap, leading to a bearish reversal shortly afterward.

Ethereum’s Estimated Leverage Ratio (ELR), which measures speculative sentiment by dividing Open Interest (OI) by coin reserves, is a crucial metric in assessing the likelihood of a price movement. A higher ELR generally indicates bullish expectations, as traders are willing to take on more risk. In early February, Ethereum experienced a sharp price drop that temporarily halted the uptrend of the ELR, but the metric has since bounced back, signaling a possible short-term bullish phase.

Furthermore, Ethereum’s Open Interest has increased from $13.3 billion to $14.2 billion over the past few days, coinciding with a price bounce from $2.5K to $2.7K. This rise in Open Interest alongside an increase in the leverage ratio supports the view that traders are becoming more optimistic about Ethereum’s price movements. Another bullish sign has been the large movement of ETH out of exchanges, which indicates accumulation. While this is a positive signal, it does not automatically guarantee a reversal of the bearish trend in the short term.

However, the liquidation heatmap provides a critical clue about potential price movements. A large pocket of liquidity exists between the $2.8K and $2,880 range, which may attract price action towards this area. This zone has become a key short-term magnetic level for market participants. A breakout above $2.8K could fuel increased enthusiasm and leveraged trading. Nevertheless, if Ethereum rises to $2,880, it could very well be a temporary rally, leading to a bull trap before a significant price correction occurs.

The next key resistance after the $2.8K zone lies at the $3.5K level, but this target seems distant for now. Ethereum’s immediate price trajectory is critical. A sustained move above $2.8K might fuel further optimism in the market, but traders must remain cautious of the potential for a sudden bearish reversal, especially in a volatile market environment.

In summary, while there is some optimism for Ethereum’s price, especially with the potential bounce towards $2,880, the current market signals suggest that traders need to approach with caution. A breakout past the $2.8K resistance could trigger increased bullish activity, but it may also lead to a bull trap followed by a bearish correction. Traders should watch for any signs of weakness after the price approaches this level and be prepared for a possible reversal.

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Maheen Hernandez

A finance graduate, Maheen Hernandez has been drawn to cryptocurrencies ever since Bitcoin first emerged in 2009. Nearly a decade later, Maheen is actively working to spread awareness about cryptocurrencies as well as their impact on the traditional currencies. Appreciate the work? Send a tip to: 0x75395Ea9a42d2742E8d0C798068DeF3590C5Faa5

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