The bullish outlook emerges as ETH price decline stalls near its old cup-and-handle resistance level, which is now acting as support, raising the prospect of a strong rebound ahead.
Ether (ETH), Ethereum’s native asset, may recover nearly 60% in the coming sessions as bulls hope for a classic bullish continuation pattern.
After completing a cup-and-handle formation, prices may rise to or above $6,500 from their current levels near $4,100, suggested Matthew Hyland, an independent on-chain analyst, in a tweet published Monday.
A perfect cup and handle retest
Hyland’s chart shows ETH price returning to the previous cup and handle pattern’s old point of resistance (the yellow horizontal line in the chart below), in a corrective move that began after the cryptocurrency reached a record high of $4,867 on Nov. 10. (data from Coinbase).
After testing the cup and handle resistance as interim support, ether experienced a soft rebound, raising the prospect of a longer move to the upside.
In particular, the initial breakout attempts from bullish technical setups usually necessitate additional confirmation.
Notably, these early gains tend to trap two types of buyers: 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 due to sudden bearish reversals, prompting them to defend their positions.
Notably, these early gains tend to trap two types of buyers: 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 due to sudden bearish reversals, prompting them to defend their positions.
Notably, these early gains tend to trap two types of buyers: 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 due to sudden bearish reversals, prompting them to defend their positions.
The tables are turned when the decline stalls in the middle, resulting in either sideways movement or a full-fledged rebound. As a result, short sellers lose faith; while longs who survived the previous pullback gain confidence in the current bullish technical setup.
A positive rebound initiates a bullish feedback loop; prompting the price to prepare for the pattern’s final leg — a strong uptrend. As Hyland hinted; Ether’s retesting of the “huge Cup & Handle pattern” resistance as support appeared perfect — a possible cue for a sharp rebound.
Why $6,500?
The buy point in a cup and handle pattern appears when the price breaks above its; resistance level and trading volumes increase.
Traders; typically estimate their profit target by measuring the distance from the right top 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, and its breakout point is around $4,100. As a result, the breakout target for the pattern is at or above $6,500. According to a Harvard study; cup and handles have a 65 percent and 68 percent success rate in the forex and stock markets, respectively.
Breaking below the pattern’s resistance level, which coincides with multi-month rising trendline support, risks invalidating the bullish setup. This could push Ether’s price to the next support level near $3,090.
Source: Cointelegraph
