Ethereum’s native token Ether has rallied more than 415 percent to $3,800 this year. Two major bullish patterns that have been spotted on its charts show the potential for an additional upside move towards the $6,200-$6,500 range.
ETH price eyeing $4K resistance breakout
A breakthrough above the psychological $4,000 mark, which acts as a resistance pattern to the five-month-old ascending triangle or cup and handle patterns, could set off a price rally.
The profit target for Ascending Triangle is $6,250. This was calculated by measuring the distance between the horizontal and rising trendlines, and then adding the output to get the potential breakout level of around $4,000.
ETH/USD daily chart with Ascending Triangle (black), and Cup & Handle(blue). Source: TradingView
The price boom is therefore a reflection of moves equivalent to approximately 64%.
The Cup and Handle design, with a slightly lower success rate than Ascending Triangle’s, could lead to $6,550 in the next sessions. This is 56% more than the current levels.
The profit target is calculated by measuring the distance between Cup’s right peak (or its bottom) and then adding it to the potential breakout level of $4,000, which is the same as Ascending Triangle.
Trading volume is one of the main catalysts supporting the bullish indicators. It has been declining across the formations of these patterns. This suggests that traders are not feeling as confident. The relative strength index (RSI), which is below 70, shows that there is still plenty of room for a bull market.
The Bitcoin correlation effect
The positive outlook for ETH is evident in the wake a market-wide uptrend led by Bitcoin’s (29) month-to-date price rise.
CryptoWatch reports that the 30-day correlation coefficient of Bitcoin and Ethereum is near 0.89. This means that 89% of the assets are moving in sync.
Ecoinometrics is a crypto-focused newsletter that highlighted the positive correlation. It noted the Ether price’s reaction at Bitcoin “halvings,” which are preprogrammed events that reduce the BTC’s issuance rate half every four years to 21 million.
The portal looked at Bitcoin and Ether prices after the previous two halvings, and used the data to predict their tops following the third halving on May 11, 2020. It predicted that Bitcoin would rise 29.5x to reach $253,800 by November 2021.
Bitcoin vs. Ethereum — Post-BTC halving growth trajectory. Source: Ecoinometrics
Ecoinometrics also highlighted $22,300 for Ether’s price target during the same period. This is based on the 120x price rally that followed the second Bitcoin halving.
ETH supply shortage continues
The ongoing supply squeeze provided more bullish cues to Ethereum.
Related: Ethereum price reaches $3,800, boosting bulls’ control in Friday’s ETH options expiry
Notably, Monday’s total Ether deposit into the Ethereum 2.0 smart contracts reached an all-time high at 7.98 million ETH. These tokens remain locked/untransferable for one year or more.
Total Ethereum value in ETH 2.0 deposit agreement. Source: Glassnode
The total Ether holdings across all exchanges remained at record low levels. CryptoQuant reported 18.187 million Ethereum in reserves on Monday, compared to 23.323million ETH a year ago.
All exchanges have Ethereum reserves. Source: CryptoQuant
Santiment, a crypto data tracker, reported that there was an increase in Ether addresses last week and that the number of nonzero Ether wallets hit a record 64.5 million.
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