Ether (ETH), Ethereum’s native asset, may rebound by nearly 60% in the coming sessions as bulls bet on a classic bullish continuation pattern
Ether (ETH), Ethereum’s native asset, may rebound by nearly 60% in the coming sessions as bulls bet on a classic bullish continuation pattern.
After completing a cup-and-handle configuration, prices might soar to or beyond $6,500, according to Matthew Hyland, an independent on-chain expert, in a tweet published Monday.
A perfect recheck of the cup and handle
In a corrective move that began after the cryptocurrency reached a record high of $4,867 on Nov. 10, Hyland’s chart shows Ether returning to the old point of resistance of its previous cup and handle pattern (the yellow horizontal line in the chart below) (data from Coinbase).
After testing the cup and handle resistance as interim support, Ether experienced a soft rebound, raising the possibility of a longer move to the upside.
In more depth, the first attempts at breakouts from bullish technical setups usually require extra confirmation.
Longs who enter deep into the pattern hoping for a breakout (which fails) and longs who chase the breakout but see their small profit evaporate following sudden bearish reversals, prompting them to defend their positions, are two groups of buyers who are trapped by these early gains.
When a drop comes to a halt in the middle, it might either lead to sideways movement or a full-fledged recovery. As a result, short sellers lose faith in the current bullish technical setup, while longs who survived the last drop gain trust in it.
A bullish feedback loop is put in motion by a good comeback, urging the price to prepare for the pattern’s final leg – a strong uptrend. Ether’s retesting of the “large Cup & Handle pattern” resistance as support appeared excellent — a possible cue for a fast bounce, as Hyland hinted.
What’s the deal with $6,500?
When the price breaks above its resistance level and trade volumes grow, the buy point in a cup and handle pattern appears.
Traders usually calculate their profit target by measuring the distance between the right top and bottom of the cup and then multiplying that value by the buy point.
The maximum depth of the cup is roughly $2,500, with a breakeven point of around $4,100. As a result, the breakout target for the pattern is set at or above $6,500. According to a Harvard study, cups and handles have a success rate of 65 percent and 68 percent in the currency and stock markets, respectively.
