Context of the Rally and Correction
In the four days leading up to the correction, ZEC displayed remarkable performance, rising from a level near $503 to a peak close to its all-time high at $688. This increase of over 37% was accompanied by high volume and growing interest in Zcash’s privacy features, particularly its zk-SNARKs that enable optional shielded transactions.
However, as is often the case after a sharp upward movement towards a major resistance level like an all-time high, profit-taking took precedence. The liquidity sweep above $688 attracted sellers, leading to a rapid decline. Currently, the price hovers around $532-$520, representing a drop of approximately 20-23% from the recent peak. This dynamic is not unusual; powerful rallies are often followed by healthy retracements that test the conviction of participants.
Technical Analysis: Is a Return to $440 Inevitable?
The Fibonacci retracement is one of the most respected tools among institutional and retail traders. It corresponds to a zone where retracements statistically have a high probability of bouncing back, as it represents a balance between impulsive movement and correction.
From the bullish impulse on April 30 at $330, the major 0.618 zone is located around $450. Additionally, the daily Fibonacci Bands have a midpoint around $440. The likelihood of ZEC reaching this zone in the coming days is very high.
However, maintaining above $520-$530 would preserve the overall bullish structure. A breakdown below $500 would open the door to a test of $430-$450, temporarily invalidating the bullish trend.
A close below these prices would lead ZEC to seek its bullish order block at $330, indicating that ZEC would have retraced its entire rise.
The daily RSI shows a massive bullish divergence and has returned to neutral territory. Now, confirmation of a bottom above $440 with bullish divergences on lower time frames is awaited.
With a hold above $430, ZEC could rebound towards $830, representing an increase of 80%. It will be necessary to wait for the rebound and a pullback to position oneself or to set a stop-loss at $416.
Futures Positioning and Market Sentiment
The Futures data provides a nuanced perspective. Funding rates have turned positive again, reflecting a growing interest in long positions. This indicates that buyers are gradually returning, but it also carries a risk: premature longs during a correction can amplify a cascade of liquidations if the price drops further.
Open interest remains strong, and the long/short ratio is slightly bullish. However, with positive funding rates during a pullback, the market remains vulnerable to an additional “shakeout” before a genuine reversal. This is precisely the type of setup that allows smart money to liquidate impatient longs before the real recovery.
It is worth noting that the largest cluster is located to the south around $380. A rapid drop to this level remains possible. This is why it is essential to wait for a clear rebound at $440 before positioning oneself.
The Two Scenarios to Watch
Bullish Scenario — Main Probability if Support Holds:
Buyers defend the $520-$550 zone. A rebound confirmed by a bullish engulfing candle or a bullish RSI divergence could propel ZEC towards $600-$650 quickly, then test the recent highs at $688. The longer-term target is between $750 and $800 in the coming weeks, driven by the privacy narrative and increasing institutional flows.
Bearish Scenario:
If selling pressure persists — particularly with unsupported positive funding rates creating conditions conducive to liquidation cascades — we could see a liquidity sweep below $500, targeting the $450-$420 zone. This would represent a deeper but healthy retracement, establishing an even stronger base for a subsequent recovery.
ZEC is at a pivotal moment. After a 41% rally, the current correction tests market conviction. With sustained volume, positive funding rates returning, and an overall bullish technical structure on the weekly chart, buyers have a real opportunity to defend this level.
The market remains uncertain in the short term. However, technical confluence suggests that Zcash could well resume its ascent towards $830 before the end of the year. The coming days will be crucial.
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