Ether (ETH), Ethereum’s native token, may recover roughly 60% in the next periods as bulls aim for a textbook bullish extension pattern.
After finishing a cup-and-handle configuration, prices may soar to or beyond $6,500 from their present levels of $4,100, suggested Matthew Hyland, a freelance on-chain expert, in a tweet posted Monday.
A Flawless Cup And Handle Check
#Ethereum broke its streak of 7 green weekly candles however it perfectly retested the huge Cup & Handle pattern it broke out of: pic.twitter.com/KpIVJGGsZF
— Matthew Hyland (@MatthewHyland_) November 22, 2021
ETH/USD CHART Source: Tradingview.com
Hyland’s graphic (posted on Twitter) illustrates Ether rebounding to the prior cup and handle design’s old area of resistance (the yellow horizontal line in the chart above), in a corrective swing that began after the cryptocurrency achieved a record level of $4,867 on Nov. 10. (data from Coinbase).
After probing the cup and handle barrier as intermediate support, Ether had a moderate comeback, boosting the prospect of a longer move to the upside.
Further, the first breakaway attempts out of bullish analytical setups are often met with resistance and require further confirmation.
Particularly, these initial gains tend to snare two types of buyers: longs who gain entry deep in the sequence holding out hope for a comeback (which completely fails), and longs who pursue the breakout but witness their small profits melt away as a result of sudden bearish setbacks, which compel them to protect their positions.
In contrast, when a downturn comes to an abrupt halt in the middle, the market might either move sideways or see a full-fledged comeback. The effect is that short sellers lose faith, while longs who weathered the prior dip gain confidence in the current bullish technical environment.
A good recovery sets in action a bullish feedback loop, urging the price to brace for the last leg of the pattern – a powerful uptrend — as the pattern progresses. It looked like Ether had retested the “large Cup & Handle pattern” resistance as support, as Hyland had said, and that this was an indication that the market was ready for a dramatic bounce.
Why Is It $6,500?
A surge in trading activity occurs when the price of a cup and handle formation breaks beyond its resistance level, signaling the emergence of the buy point.
Trading professionals generally estimate their profit objective by calculating the length between the cup’s right top and bottom and then multiplying the result by the price at which they want to acquire the cup.
The maximum depth of the cup is over $2,500, and its breakout peak is approximately $4,100. As a result, the breakout objective for the pattern is at or over $6,500. According to Harvard research, cup and handles have a 65% and 68% rate of success in the currency and stock markets, correspondingly.
Breaking underneath the pattern’s resistance point, which coincides with multi-month rising trendline support, risks undermining the bullish setup. This might push Ether’s price to the next support level at $3,090.