As bulls place their hopes on a bullish continuation pattern, Ethereum’s native asset Ether (ETH) may see a 60% rebound.
In a Monday tweet, Matthew Hyland, an independent analyst on the chain, suggested that prices could rise to $6,500 or more from their current levels of $4,100.
Perfect cup and handle retest
Hyland’s chart shows Ether returning back to the point of resistance of the previous cup-handle pattern (the yellow horizontal lines in the chart below), a corrective move that began after the cryptocurrency hit its record high of $48,867 on Nov. 10. (Data from Coinbase).
After testing the handle resistance and cup resistance, Ether experienced a soft rebound. This raises possibilities for an extended upside move.
Weekly chart of the ETH/USD exchange rate. Source: TradingView, Matthew Hyland
Detail: Typically, additional confirmation is required for the first attempt at a breakout from bullish technical setups.
These early gains can trap two types of buyers: longs that enter the pattern deep hoping for a breakout (which fails) and longs that chase the breakout only to see their small profits evaporate after sudden bearish reversals which prompts them to defend their positions.
The tables can turn when the decline slows down midway. This either leads to sideways or full-fledged recovery. Short sellers lose confidence while long-term investors who have survived previous pullbacks gain confidence in the bullish technical setup.
Positive rebound creates a bullish feedback loop, which prompts the price to prepare for a strong uptrend. Hyland suggested that Ether’s retesting of the “huge Cup & Handle” resistance as support seemed perfect, which could be a cue for a sharp rebound.
What’s the deal with $6,500
When the price breaks through its resistance level and trade volumes increase, that is when a cup-and-handle pattern’s buy point.
Traders often estimate their profit target by measuring distance between the cup’s right tip and its bottom, then adding that number to the buy price.
Weekly price chart for ETH/USD with cup-and-handle profit target. Source: TradingView
The maximum depth of the cup is almost $2,500 and its breakout point is approximately $4,100. The pattern’s breakout point is now at $6,500. Harvard research shows that handles and cup have a 68% and 65% success rate in stock and forex markets, respectively.
Related: Analysts believe an ‘impulse move could push Ethereum’s price up to $6K-$14K
Breaking below the pattern’s resistance — which coincides with multi-month rising trendline supports — could lead to the invalidation of the bullish setup. This could lead Ether’s prices to move towards the $3,090 support level.
com. You should do your research before making any investment or trading decision.