Ethereum Faces Dead Cat Bounce Risk Below $3,000

Ethereum’s price trajectory has been firmly bearish since early October, when the digital asset reached an all-time high just above $4,900 before being caught in the market-wide crash on October 10. According to crypto analyst TradingShot, ETH has been trapped within a Channel Down pattern that has triggered double-digit percentage declines. The pattern has been remarkably consistent, with both bearish legs since the trend’s establishment recording identical 27.50% declines.

The persistence of this Channel Down pattern has pushed Ethereum below the critical $3,000 support level for the first time at the start of the current week. This breakdown represents a significant psychological and technical threshold for the largest altcoin by market capitalization. The consistent 27.50% decline on each bearish leg demonstrates the pattern’s reliability and the strength of the selling pressure that has dominated Ethereum’s price action throughout October and into November.

Despite the overwhelming bearish momentum, TradingShot identifies a potential short-term recovery scenario based on technical indicators. The analyst notes that Ethereum has formed higher lows on the 1-Day Relative Strength Index (RSI), creating a bullish divergence that typically signals potential price recovery. This development suggests that Ethereum could experience a temporary bounce, potentially rising by more than 10% from current levels.

However, TradingShot characterizes this potential recovery as a classic ‘dead cat bounce’ – a temporary recovery in a declining market that ultimately gives way to further losses. The analyst believes any recovery would likely push ETH price up to approximately $3,400 before encountering significant resistance. This level coincides with the 1-Day MA50, which previously acted as a rejection point on October 27, triggering the last 27.50% decline in Ethereum’s value.

The dead cat bounce scenario presents a dangerous trap for bullish traders, as the temporary recovery could create false optimism before resuming the broader downtrend. TradingShot emphasizes that while the RSI divergence appears bullish in the short term, the overall market structure remains bearish, making any recovery likely temporary and ultimately unsustainable.

TradingShot provides a specific timeframe for this potential market scenario, expecting the dead cat bounce to play out over the coming weeks. The analyst projects that the temporary recovery could unfold through late November, with the subsequent decline expected to resume by early December. This gives Ethereum only a brief window for any potential recovery before the bearish trend reasserts itself.

The projected decline following the dead cat bounce is expected to be sharp and significant. TradingShot anticipates that once selling pressure resumes, it could trigger a crash that pushes Ethereum substantially below the $3,000 level. The analyst’s target for the subsequent decline sits at $2,650, which would represent a new lower low for ETH and confirm the continuation of the bearish trend established in early October.

This projected decline to $2,650 would mark approximately a 22% drop from the anticipated dead cat bounce peak around $3,400. The timeframe and price targets provided by TradingShot create a clear roadmap for Ethereum traders, highlighting key resistance levels to watch and potential entry points for both short-term and longer-term positions in the evolving market structure.