Ethereum’s native asset, Ether (ETH), could rebound nearly 60% in the upcoming sessions as the bulls place their hopes on a classic bullish continuation pattern.
Prices could climb to or above $ 6,500 from their current levels near $ 4,100 after a cup-and-grip formation is complete, Matthew Hyland, an independent on-chain analyst, hinted in a tweet posted Monday.
A perfect cup and handle retest
Hyland’s chart shows how ether is reverting to the old resistance point of its previous cup and handle pattern (the yellow horizontal line in the chart below) in a corrective move that began after the cryptocurrency hit its record high of $ 4,867 on November 10th ( Data from Coinbase).
Ether saw a mild rebound after testing cup and handle resistance as preliminary support, increasing the chances of extended upward movement.
In detail, the first attempts to break out of bullish technical setups usually require additional confirmation.
In particular, these early gains tend to trap two groups of buyers: long positions that go deep into the pattern and hope for a breakout (which will fail) and long positions that follow the breakout but their small ones See profits fizzle out after sudden bearish reversals, prompting them to defend their positions.
But the tide will turn if the decline stalled halfway, resulting in either a sideways move or a full-fledged rebound. As a result, short sellers lose confidence while longs that survived the previous pullback become convinced of the prevailing bullish technical setup.
A positive rebound sets off a bullish feedback loop, causing price to prepare for the final leg of the pattern – a strong uptrend. As Hyland suggested, Ethers retesting the resistance of the “giant cup and handle pattern” seemed perfect as support – a potential cue for a sharp rebound.
Why $ 6,500?
The buy point in a cup-and-grip pattern occurs when the price breaks above its resistance level with an increase in trading volume.
Traders typically 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 nearly $ 2,500 while the breakout point is around $ 4,100. As a result, the pattern’s breakout target is at or above $ 6,500. A Harvard study shows cups and handles have a success rate of 65% and 68%, respectively, for currency and stock markets.
Related: Analysts say a “momentum move” could put Ethereum price in the $ 6,000 to $ 14,000 range
Conversely, there is a risk that the bullish setup will be undershot if the resistance level of the pattern is undershot – at the same time as the rising trendline support has been rising for several months. This could take the price of Ether to the next support level near $ 3,090.
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