Ethereum’s “Giant Cup & Handle Pattern” confirms the ETH price target of USD 6.5,000
Ethereum’s native asset, Ether (ETH), could rebound nearly 60% in the upcoming sessions as the bulls hope for a classic bullish continuation pattern.
Price could rise to or above $ 6,500 from current levels near $ 4,100 upon completion of a cup and handle formation, suggests Matthew Hyland, an independent on-chain analyst. in a tweet posted on Monday.
A review of the perfect cup and handle
Hyland’s chart shows Ether is returning to the old resistance point of its previous Cup and Manage pattern (yellow horizontal line in the chart below) in a correction that began after the cryptocurrency hit a record high of $ 4,867 on November 10 (data from Coinbase).
Ether saw a slight rebound after testing cup and tackle resistance as preliminary support, increasing the possibility of a longer uptrend.
In particular, the first outbreaks of bullish technical setups often require additional confirmation.
In particular, these early wins tend to trap two groups of buyers: those who buy deep into the pattern in hopes of a breakout (failure), and those who chase the breakout but see a profit prompting them to defend their positions.
However, the tables change if the decline stops halfway, resulting in a sideways move or a full rally. As a result, short sellers lost confidence, while longs that survived the previous pullback gained confidence in the popular bullish technical lineup.
A positive bounce creates a bullish feedback loop in the move, causing price to prepare for the final leg of the pattern – a strong uptrend. As Hyland suggested, Ether is retesting the “giant cup and handle” resistance as the support appears perfect – a potential sign of a strong rebound.
Why $ 6.5K?
A buy point in a cup-and-handle pattern occurs when price breaks a resistance level along with an increase in trading volume.
Traders often estimate their profit target by measuring the distance from the top right of the cup to the bottom and then adding the number to the buy point.
The maximum depth of the cup is close to $ 2,500 while the breakout point is around $ 4,100. Therefore, the pattern’s breakout target is at or above $ 6,500. A Harvard study found that cups and handles have success rates of 65% and 68%, respectively, for the currency and stock markets.
Related: Analysts say an “impulsive move” could push Ethereum price in a range of $ 6,000 to $ 14,000
Conversely, a break below the resistance of the pattern – which coincides with the support of the multi-month uptrend line – risks invalidating the bullish setup. This could take Ether price to the next support level near $ 3,090.