Ethereum’s “giant cup-and-handle pattern” confirms its price target of $ 6,500

The native asset of Ethereum, Ether (ETH) could rise nearly 60% in the upcoming sessions as the bulls place their hopes on a classic bullish continuation pattern.

Prices may rise from near $ 4,100 to or above $ 6,500 from their current level after a “Cup and Handle” formation is completed. Matthew Hyland, an independent on-chain analyst, interpreted in a tweet posted on Monday.TO

A perfect repetition of the cup and handle

Hyland’s chart shows Ether is returning to the old resistance point of its previous cup and handle pattern. (the yellow horizontal line in the diagram below), in a corrective move that began after the cryptocurrency hit its all-time high of $ 4,867 on November 10th (Data from Coinbase).

Ethereum’s “giant cup-and-handle pattern” confirms its price target of $ 6,500
Ethereum’s “giant cup-and-handle pattern” confirms its price target of $ 6,500

The price of Ether saw a slight rebound after testing cup and handle resistance as its interim support, increasing the chances of a longer bullish move.

ETH / USD weekly price chart. Source: TradingView, Matthew Hyland

In detail, early attempts to break out of bullish technical setups usually require additional confirmation.

In particular, these early wins tend to trap two groups of buyers: Long holders who go deep into the pattern hoping for a (failed) breakout, and long holders who want a breakout but see their small profit fizzle out after sudden bearish reversals, prompting them to defend their positions .

Nevertheless, Everything changes when the descent stops halfway, resulting in side action or a full blown jump. As a result, short sellers lose confidence while long sellers who survived the earlier pullback become convinced of the prevailing bullish technical setup.

A positive rally triggers a bullish feedback loop, which prepares the price for the final segment of the pattern: a strong uptrend. As Hyland suggested Ether retesting the “giant cup and handle” resistance as support seems perfect, a potential sign of a strong rebound.

Why $ 6,500?

The buy point in a cup-and-handle pattern occurs when the price breaks above its resistance level with an increase in trading volume.

Traders usually estimate their profit target by measuring the distance from the top right corner of the cup to the bottom and then adding the number to the buy point.

ETH / USD weekly chart with profit target for cup and handle. Source: TradingView

The cup’s maximum depth is nearly $ 2,500 while its predetermined breaking point is around $ 4,100. As a result, the pattern’s breakout target is at or above $ 6,500.. A Harvard study shows that the Cup and the Handles have a 65% and 68% success rate, respectively, in the currency and stock markets.

On the contrary, if it breaks below the resistance level of the pattern, which coincides with the support of the rising trendline for several months, you run the risk of invalidating the bullish configuration. This could push the price of Ether to the next support level near $ 3,090.

The views and opinions expressed are those of the author only and do not necessarily reflect the views of Cointelegraph.com. Every investment and trade movement carries risks. When making a decision, you need to do your own research.

Similar Posts