Technical Analysis Signals Impending Rally
Ethereum's recent price action suggests its ABC corrective pullback may be complete, setting the stage for a significant Wave 3 rally. This phase is typically the most explosive in a bullish cycle, with projections indicating a target of $5,300 by the first quarter of 2026.
A bullish Fibonacci bounce observed at the $2,600 support level aligns with positive developments such as ETF inflows and continued growth in layer-2 solutions. These factors are contributing to a 15% month-over-month increase in DeFi volumes, further bolstering the optimistic outlook for Ethereum.
$ETH there is a strong possibility that the ABC pull back is complete
— The Long Investor (@TheLongInvest) November 28, 2025
And Wave 3 is next for $ETH. pic.twitter.com/Us3gJumtvk
The Analyst's Core Thesis: ABC Correction Complete
According to technical analyst @TheLongInvest, the recent price movement from highs of $3,800 down to lows of $2,500 has been identified as an ABC retracement. The analysis, which spans from March to February 2026, highlights the $2,600 level as a crucial support zone, marked by the 0.618 Fibonacci level. Ethereum has shown a convincing bounce from this point, establishing a higher low, which is a key indicator for the completion of a corrective phase.
Elliott Wave theory, the framework used for this analysis, suggests that market movements follow predictable patterns driven by investor psychology. While Waves 1 and 2 lay the groundwork, Wave 3 is recognized for its significant price surge, often extending considerably beyond the length of Wave 1.
Wave 3 Targets: $4,000 to $5,300 in Early 2026
The bullish projection indicates that Ethereum could reclaim the $4,000 mark by the end of the current year. Further extensions are anticipated, with a target of $5,300 potentially being reached in the first quarter of 2026. This optimistic forecast is supported by several prevailing market catalysts.
Key among these are the expected full rollout of the Dencun upgrade and the increasing institutional adoption facilitated by spot ETFs. The Ethereum layer-2 ecosystem, which underpins DeFi and NFT activities, continues to demonstrate robust performance, with transaction volumes experiencing a 15% month-over-month increase, according to recent data. If Bitcoin's post-halving momentum persists, a breakout in the ETH/BTC pair could position Ethereum as a market leader.
Fundamental Catalysts Fueling the Bull Case
Despite the optimistic outlook, potential risks remain. A bearish scenario suggests a deeper retracement to $1,400 if support at $2,300 falters, potentially triggered by macroeconomic pressures such as continued Federal Reserve interest rate hikes or regulatory actions from the SEC. This duality of potential outcomes is reflected in community sentiment, with some traders anticipating an "explosive" move while others express caution, referencing past instances of overestimated rallies.
As Ethereum currently trades near $2,800, the technical setup presents a significant opportunity for traders with a higher risk tolerance. With approximately 32 days remaining in the year, positioning for the anticipated Wave 3 rally could yield substantial gains. However, prudent risk management, including the use of stop-loss orders, is strongly advised. In the dynamic cryptocurrency market, precise timing is crucial, and the current analysis suggests that the opportune moment may be approaching.