Ethereum (ETH), the second-largest cryptocurrency by market capitalization, is currently experiencing a pullback after reaching resistance at $2,820. This correction has raised concerns among traders and investors as the price approaches a crucial support level. The big question now is whether Ethereum can hold this support and potentially rebound, or if further declines are on the horizon.

Ethereum’s Recent Price Action

Ethereum’s price recently surged past the $2,750 resistance level, with a notable move above $2,800. This rally, however, was short-lived as sellers began to exert pressure at $2,820, causing a retracement. The cryptocurrency saw a decline that brought it below key levels at $2,780 and $2,750, signaling a potential shift in market sentiment.

Currently, Ethereum is trading below $2,720 and the 100-hourly Simple Moving Average (SMA), which is often considered a critical indicator of short-term momentum. A break below a key bullish trend line at $2,740 on the hourly chart of ETH/USD has further intensified the bearish outlook. This trend line had previously acted as a support level, and its breach suggests that the market may be leaning towards a more cautious stance.

Key Support Levels in Focus

As Ethereum continues its downside correction, attention has now turned to the support levels that could determine its next move. The immediate support is found near $2,645, a level that coincides with the 61.8% Fibonacci retracement of the recent upward wave from the $2,535 low to the $2,820 high. This support level is crucial as it represents a common retracement level where assets often find a temporary bottom before resuming an uptrend.

Should Ethereum hold above $2,645, it could signal a potential bounce back towards higher resistance levels. The first hurdle for any recovery attempt lies at $2,720, followed by more substantial resistance at $2,740. If Ethereum can close above $2,740, it might set the stage for another test of the $2,820 resistance level. A break above this level could pave the way for a move towards the $2,880 resistance, with $3,000 being the ultimate target in the near term.

What If Ethereum Fails to Hold Support?

While there is potential for a rebound, the risk of further downside cannot be ignored. If Ethereum fails to defend the $2,645 support level, the next major support is located around $2,600. A clear move below this level could accelerate the sell-off, pushing the price towards $2,550, where the bulls might attempt to regroup.

A deeper decline could see Ethereum testing the $2,500 support level, a psychological threshold that has historically acted as a strong base. If the selling pressure intensifies further, the price could be drawn down to the next key support at $2,440, a level not seen in several weeks.

The Bigger Picture: Rebound or Continuation of Downtrend?

The current pullback in Ethereum’s price is part of a broader market correction that has impacted many cryptocurrencies. While short-term technical indicators point to a potential continuation of the downtrend, the overall outlook for Ethereum remains cautiously optimistic. The ability of the bulls to defend key support levels will be critical in determining whether this correction is a temporary setback or the beginning of a more extended downturn.

For now, Ethereum traders and investors should closely monitor the $2,645 support level. A successful defense of this level could restore confidence and lead to another attempt at breaking higher resistance levels. On the other hand, a failure to hold this support could open the door to further losses, making the coming days crucial for Ethereum’s near-term future.