Ethereum’s native token Ether (ETH) has rebounded 40% against Bitcoin (BTC) after bottoming locally at 0.049 on June 13. The ETH/BTC pair is now at a two-month high and could continue its rally in the coming weeks. classic technical pattern.

ETH draw cup and handle drawing

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In particular, ETH/BTC has been forming a “cup and handle” on lower timeframe charts since July 18th.

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A “cup and handle” setup usually appears when the price falls and then bounces, which looks like a U-shaped recovery that looks like a “cup”. Meanwhile, the retracement leads to a pullback as the price moves down inside a descending channel called the “handle”.

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The pattern is resolved after the price rises to approximately the level of 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 to recover towards the resistance line around 0.071 BTC. After that, a decisive break of the cup and handle above the neckline could take ETH/BTC to 0.072, up 12.75% from today’s price.

The cup-and-handle model has a 61% chance of hitting a profit target. according experienced investor Tom Bulkowski.

Confluence factor

The bullish setup for ETH/BTC is also related to the transition of the Ethereum network from Proof-of-Work (PoW) to Proof-of-Stake (PoS), possibly via a “merger” scheduled for mid-September.

Will the Ethereum Merge hopium continue, or is this a bull trap?

Meanwhile, market analyst Mikael van de Poppe He speaks that Ethereum could see more upside potential compared to Bitcoin due to the merger hype as the momentum builds in the coming weeks.

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

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

Conversely, a number of 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 here are solely those of the author and do not necessarily reflect those of Cryptooshala.com. Every investment and trading step involves risk, you should do your own research when making a decision.