Ethereum’s native asset, Ether (ETH), might rebound by almost 60% in the coming days as the bulls now pin their hopes on a classic bullish continuation pattern. The bullish outlook seems to come up as the price of ETH stalls near its old cup-and-handle resistance level. This level is now acting as support and therefore raising the possibility of a strong rebound ahead.
Following this trend, the prices might rise to surpass $6,500 from their current levels near $4,100 after completing the cup-and-handle formation, hinted Matthew Hyland. Hyland is an independent on-chain analyst who tweeted his opinion on November 22, 2021.
An Ideal Cup-And-Handle Retest In The ETH market
Hyland’s latest chart shows ETH returning to its old point of resistance of its past cup and handle pattern. The move comes in a corrective move that started after the crypto reached its record high of $4,867 on November 10, based on data acquired from the Coinbase exchange.
Ether experienced a soft rebound after it tested the cup and handle resistance as its interim support, which raised possibilities of an extended move upside in the future.
Taking this data into context, the first breakout trials out of bullish technical setups normally need extra confirmation. Interestingly, these early gains seem to trap two types of buyers: longs who chase the breakout but see their small profit evaporate after abrupt bearish reversals and longs who enter deep in the pattern hoping for a breakout (but it fails). Such scenarios push the buyers to defend their positions.
Buy Crypto NowHowever, the field turns when the decline stalls midway resulting in sideways action or a full-fledged rebound. As a result of that occurrence, the short sellers lose confidence as the longs who survived the previous drop gain some conviction in the current bullish technical setup.
A positive rebound launches a bullish feedback loop, which prompts the price to get ready for the final leg in the pattern, a strong uptrend. As Hyland highlighted, Ether’s retesting the “huge Cup & Handle pattern” resistance as support seemed perfect, a possible cue for a steep rebound.
Why $6,500?
The best buying point in a cup and handle pattern comes up when the price breaks above its resistance level with a surge in trading volumes.
Traders normally estimate their profit target by determining the distance from the cup’s right top to its bottom and then adding the number to their buy point.
The cup’s maximum depth is almost $2,500, while the breakout point is about $4,100. In that context, the pattern’s breakout target comes to be at or over $6,500. A recent Harvard study indicates that the cup and handles have a 65% and 68% success rate for the forex and stock markets, respectively.
Breaking below the pattern’s resistance level that coincides with multi-month rising trendline support risks invalidating the bullish setup. It may lead Ether to drop to the next support line that is located near $3,090.
