Ethereum’s native Ether (ETH) token has rallied by over 415% this year to over $ 3,800, and Two major bullish patterns unfolding on your charts highlight the scope of another bullish move, ultimately towards the $ 6,200 – $ 6,500 price range.
ETH price points to a resistance breakout of $ 4,000
The first decisive break above the $ 4,000 psychological mark, which serves as a resistance trend line for the five-month children’s ascending triangle and a cup-and-handle pattern, could trigger a technical rally in prices in the next sessions.
Specifically, the $ 6,250 level appears as the profit target for the ascending triangle pattern, calculated by measuring the widest distance between its horizontal and ascending trend lines and adding the exit to the potential breakout level around $ 4,000.
Therefore, the price boom reflects equivalent movements by approximately 64%.
At the same time, the cup and handle pattern, which has a slightly lower success rate than the ascending triangle, shows a potential rise towards $ 6,550 in the coming sessions, up 56% from current levels.
Your profit target arises by measuring the distance between the right peak of the cup and its bottom and adding the result to the potential breakout level around $ 4,000, the same as the Ascending Triangle.
One of the main catalysts behind the two bullish indicators is trading volume, which has been falling throughout the formation of these patterns. That suggests a weak consolidation sentiment among traders. Meanwhile, the Relative Strength Index (RSI) below the 70 overbought threshold also shows adequate room for a bullish trend.
The correlation effect of Bitcoin
The optimistic outlook for ETH comes in the wake of a market-wide bull boom led by the 29% month-to-date price rally for Bitcoin (BTC).
According to CryptoWatch, the 30-day correlation coefficient between Bitcoin and Ethereum is close to 0.89, which means that the success rate of the two assets moving in sync is 89%.
Ecoinometrics, a cryptocurrency-focused newsletter service, noted the positive correlation by highlighting the reaction of the Ether price to Bitcoin “halvings,” a pre-programmed event that cuts the BTC issuance rate in half every four years, versus to its supply limit of 21 million.
The portal studied the reactions of Bitcoin and Ether prices to the previous two halvings and applied the dataset to predict their highs after the third halving, which took place on May 11, 2020. As a result, he anticipated that BTC would surge 29.5 times to reach $ 253,800 by the end of November 2021.
Similarly, Ecoinometrics highlighted $ 22,300 as the price target for Ether in the same period, based on its 120x price rally after Bitcoin’s second halving.
ETH supply crisis continues
More bullish signals appeared for Ethereum in the form of its current supply contraction.
In particular, the total number of Ether deposited in the Ethereum 2.0 smart contract reached a historic peak of around 7.98 million ETH on Monday. These tokens remain locked / non-transferable for a year or more.
Meanwhile, the total amount of Ether held across all exchanges continued to hold around its record lows, with CryptoQuant reporting 18.187 million ETH in reserves on Monday compared to 23.323 million ETH a year ago.
Additionally, cryptocurrency data tracker Santiment reported a spike in new Ether addresses last week, while the number of non-zero Ether wallets hit a record $ 6.5 million.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Each investment and commercial movement involves a risk, you must do your own research when making a decision.
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