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.
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.
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.
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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.
Basically on a few levels ETH dollar.
Meet resistance at 0.0725 BTC dollars.
Overall, we expect more momentum towards consolidation in September. pic.twitter.com/QpmkyTwjyb
– Michael van de Poppe (@CryptoMichNL) 23 July 2022
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.
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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