Ethereum’s native asset, Ether, might rebound close to 60% in the sessions that are coming up as bull’s hopes are pinned on a classic bullish continuation pattern.
A perfect cup and handle retest
Hyland’s chart conveys Ether going back to the old place of resistance of its prior cup and handle pattern. In a corrective transition that began after Ethereum reached its peak high of $4,867 on November 10.
Ethereum had a small rebound after testing the cup and handle resistance as its short-term support, raising the prospect of a move that extended to the upside in the future.
The first breakout ventures out of bullish technical setups normally require more confirmation.
These early gains contain two groups of purchasers: longs who chase the breakouts but watch their small profit disappear after a sudden bearish reversal, and longs who enter a position deep in the pattern wishing for a breakout (which ends in failure), which causes them to defend their positions.
However, the tables start to turn when the decline slows down midway, which will result in a full-fledged rebound or sideways action. Short sellers, as a result, lose confidence, while longs who survived the prior pullback gain confidence in the winning bullish technical setup.
A positive rebound can set a bullish response loop in motion, which will prompt the price to prepare for the last leg in the pattern. Hyland said, Ether’s testing the “huge Cup & Handle pattern” resistance line as support was seemingly perfect — which could point to a sharp rebound.
Why $6,500?
The purchase point in a cup and handle pattern begins when the price goes over its resistance level with a rise in trading volumes.
Traders usually find their profit objective by measuring the distance of the cup’s top right to its bottom and then adding the difference to the purchase point.
The cup’s max depth is around $2,500, while its breakout point nears $4,100. As a result, the breakout target of the pattern comes to be at or higher than $6,500.
Conversely, going below the pattern’s resistance line— coinciding with multi-month uptrend support — risks invalidating the bullish setup. That might lead Ether’s price to the very next support line close to $3,090.
Author: Scott Dowdy
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