Ethereum price’s cup and handle pattern suggests a possible breakout against Bitcoin

Ethereum price’s cup and handle pattern suggests a possible breakout against Bitcoin

Ethereum’s native token Ether (ETH) has rallied 40% against Bitcoin (BTC) after bottoming at 0.049 locally on June 13. Now, the ETH/BTC pair is at a two-month high and it can accordingly continue its rally to a classic technical pattern in the coming weeks.

ETH paints mug and handle patterns

Notably, ETH/BTC has formed a cup and handle on its lower timeframe charts since July 18th.

A cup and handle setup usually occurs when price falls and then rebounds in what appears to be a U-shaped bounce that looks like a “cup”. Meanwhile, the bounce leads to a pullback move, with price trends turning down within a descending channel called the “handle.”

The pattern resolves after the price rallies to roughly the same size as the previous decline. The ETH/BTC chart below illustrates 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 trace a recovery towards neckline resistance near 0.071 BTC. After that, a decisive cup and handle breakout of the neckline could take ETH/BTC to 0.072, up 12.75% from today’s price.

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

The merge factor

The bullish setup for ETH/BTC also aligns with Ethereum’s Proof-of-Work (PoW) to Proof-of-Stake (PoS) network transition, 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 says that ether could see more upside versus bitcoin due to the merge hype as momentum builds in the coming weeks.

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

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

Conversely, risks for Ethereum with the merge update include potential technical issues, delays, or even a controversial hard fork. For example, a bug split the Ethereum chain during a network upgrade in 2020.

The views and opinions expressed herein are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should do your own research when making a decision.