Ethereum’s original asset, ETH (ETH), could return nearly 60% in the coming sessions as bulls pin their hopes on the classic bullish continuation pattern.
Prices may rise to $6,500 or above their current levels near $4,100 after the cup and formation are completed, Matthew Hyland, an independent network analyst, suggested in a tweet published on Monday.
Perfect test for cup and handle
The Highland chart is showing Ether returning to the old resistance of the previous cup and handle pattern (yellow horizontal line in the chart below) in a corrective move that started after the cryptocurrency reached an all-time high of $4,867 on November 10 (data from Coinbase).
Ether underwent a soft comeback after testing the cup and treating resistance as temporary support, which increases the chances of an extended bullish move.
ETH/USD weekly price chart. Source: TradingView, Matthew Hyland
In particular, initial breakout attempts from a bullish technical setup usually require further confirmation.
In particular, these early gains tend to attract two sets of buyers: long positions that dive deep into a quick hope pattern (which fails) and long positions that chase the flash but see their small gains disappear after sudden bearish reversals, which the site defends.
But the situation changes when the fall stops midway, resulting in a sideways movement or a complete return. As a result, sellers of short positions lose confidence, while sellers of long positions, after experiencing the previous pullback, become convinced of the prevailing bullish technical setup.
A positive pullback triggers a bullish feedback loop, forcing the price to prepare for the last stage of the pattern – a strong uptrend. As suggested by Hyland, Ether is once again testing the big cup resistance and handle pattern, where the support worked perfectly – a potential indicator of a sharp decline.
Why 6500 dollars?
The buy point in the cup and handle pattern appears when the price breaks the resistance level with increased 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 a number to the buy point.
Weekly ETH/USD price chart with cup and handle measurements. Source: TradingView
The maximum cup depth is about $2,500 and the penetration point is about $4,100. As a result, the target for a breakout of the pattern will be $6,500 or higher. Harvard research shows that mugs and pens have success rates of 65% and 68% in the foreign exchange and stock markets, respectively.
On the subject: Analysts say an “impulsive move” could lead to Ethereum’s price in the $6,000 to $14,000 range.
Conversely, a breakout of the pattern’s resistance – along with several months of support for the uptrend line – could invalidate the bullish sentiment. This could push the price of Ether to the next high at $3,090.