‘Cup and Handle’ Pattern Hints for Ethereum Price on Possible Breakout Against Bitcoin

Ethereum’s native token ETH (ETH) has rebounded 40% against Bitcoin (BTC) after hitting a local low of 0.049 on June 13. Now, the ETH/BTC pair has reached a two-month high and could extend its rally in the coming weeks, according to a classic technical pattern.

ETH draws cup and handle pattern

Specifically, ETH/BTC is forming a “cup and handle” on the lower time frame charts since July 18th.

The cup and handle setup usually shows up when the price drops and then bounces back in what appears to be a U-shaped rebound, which looks like a “cup.” In the meantime, the recovery leads to a pullback movement, as price trends drop within a descending channel called the “handle”.

The pattern improves after the price rises to a volume roughly equal to the previous low. The chart below ETH/BTC shows a similar bullish technical setup.

ETH/BTC four-hour price chart. Source: TradingView

Notably, the pair is now trading lower within the handle range but could continue to recover towards the neckline resistance near 0.071 BTC. Next, a decisive cup and a break above the neckline could push ETH/BTC to 0.072, 12.75% higher than today’s price.

The success rate of the cup and handle pattern in hitting the profit target is 61%, according to veteran investor Tom Bulkowski.

merging factor

ETH/BTC’s bullish setup is also taking cues from the Ethereum network’s transition from Proof of Work (PoW) to PoS with a possible “merger” scheduled for mid-September.

Related Topics: Will Hypium Inclusion In Ethereum Continue, Or Is It A Bull Trap?

Meanwhile, market analyst Michael van de Poppe said Says That Ether could see more upside against Bitcoin due to the consolidation hype with momentum building in the coming weeks.

Van de Poppe expects ETH/BTC to test 0.072, cup and handle profit target, as temporary resistance while holding 0.0645 or 0.057 as support.

ETH/BTC weekly price chart. Source: TradingView / Michaël van de Poppe

On the contrary, the set of risks facing Ethereum with a merger update include potential technical issues, delays, or even a controversial hard fork. For example, an error caused the Ethereum chain to split during the 2020 network upgrade.

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