Ethereum’s native token Ether (ETH) has rallied 40% against Bitcoin (BTC) after bottoming locally at 0.049 on June 13. Now, the ETH/BTC pair is at two-month highs and may extend its rally in the coming weeks, according to a classic technical pattern.
ETH draws the cup and handle pattern
Specifically, ETH/BTC has been forming a “cup and handle” on its lower time frame charts since July 18.
A cup and handle setup usually appears when price falls and then bounces off what appears to be a U-shaped recovery, which looks like a “cup”. Meanwhile, the recovery leads to a retracement movement, in which the price tends to go lower within a descending channel called the “handle”.
The pattern resolves after the price recovers to a size roughly equal to the previous decline. The ETH/BTC chart below illustrates a similar bullish technical setup.
Notably, the pair is now trading lower within the handle range, but a rally towards neckline resistance near 0.071 BTC could follow. Afterward, a decisive breakout of the cup and handle above the neckline could take ETH/BTC to 0.072, up 12.75% from today’s price.
The success rate of the cup and handle pattern in reaching your profit target is 61%, according to veteran investor Tom Bulkowski.
The factor “The Merge”
The bullish setup for the ETH/BTC pair is also based on the transition of the Ethereum network from proof-of-work (PoW) to proof-of-stake (PoS) potentially via “The Merge” scheduled for mid-2020. September.
Meanwhile, market analyst Michaël van de Poppe He says that Ether could see more upside against Bitcoin due to hype around The Merge as momentum builds in the coming weeks.
Basically a few levels on $ETH.
Facing resistance at 0.0725 $BTC.
Facing support at either 0.0645 $BTC or 0.057 $BTC.
Overall, expecting more momentum going towards the merge in September. pic.twitter.com/QpmkyTwjyb
— Michael van de Poppe (@CryptoMichNL) July 23, 2022
van de Poppe anticipates that ETH/BTC will test 0.072, the profit target of the cup and handle pattern, as intermediate resistance, while holding the 0.0645 or 0.057 level as support.
On the contrary, the range of risks for Ethereum with the Merge update includes possible technical problems, delays or even a controversial hard fork. For example, a bug had forked the Ethereum chain during a 2020 network update.
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