Ethereum Price ‘Cup and Handle’ Pattern Hints at Potential Breakout Against Bitcoin

Ethereum’s native Ether (ETH) token rallied 40% against Bitcoin (BTC) after hitting a local low of 0.049 on June 13. Now, ETH/BTC is at two-month highs and may extend its rally into the coming weeks, according to a classic technical pattern.

ETH painted cup and handle pattern

Specifically, ETH/BTC has been forming a “cup and handle” on its lower-range charts since July 18.

A cup and handle pattern usually appears when price drops and then rebounds in what appears to be a U-shaped rally, which resembles a “cup”. Meanwhile, the rally leads to a pullback, in which price trends fall inside a descending channel called the “handle”.

The pattern resolves after prices rally to a size approximately equal to the previous decline. The ETH/BTC chart below illustrates a similar bullish technical setup.

Four-hour ETH/BTC price chart. Source: Trading View

Notably, the pair is now trading lower inside the handle range, but may continue a rally towards neckline resistance near 0.071 BTC. Subsequently, a decisive break of the cup and the handle above the neckline level could lead ETH/BTC to 0.072, up 12.75% from today’s price.

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

The fusion factor

The bullish setup for ETH/BTC also takes inspiration from Ethereum’s network transition from proof-of-work (PoW) to proof-of-stake (PoS) potentially via “the merge” scheduled for mid-September.

Related: Will Ethereum Merge Hopium Continue, Or Is It A Bull Trap?

Meanwhile, market analyst Michaël van de Poppe said that Ether may see more upside over Bitcoin due to merger hype as momentum builds in the coming weeks.

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

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

Conversely, the range of risks for Ethereum with the Merge Update includes potential technical issues, delays or even a controversial hard fork. For example, a bug split the Ethereum chain during a network upgrade in 2020.

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