Ethereum’s native token Ether (ETH) rebounded 40% against Bitcoin (BTC) after hitting a local low at 0.049 on June 13. Now, the ETH/BTC pair is at two-month highs and may extend its rally into the coming weeks, following a classic technical pattern.
ETH painted cup and handle pattern
Specifically, ETH/BTC formed a “cup and handleon its lower timeframe 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 a “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.
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 to reach its profit target is 61%, according to veteran investor Tom Bulkowski.
The fusion factor
The bullish setup for ETH/BTC also draws inspiration from Ethereum’s network transition from proof-of-work (PoW) to proof-of-stake (PoS) potentially via “fusion” scheduled for mid-September.
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.
Basically a few levels on $ETH.
Facing resistance at 0.0725 $BTC.
Overall, more momentum towards the merger is expected in September. pic.twitter.com/QpmkyTwjyb
— Michael van de Poppe (@CryptoMichNL) July 23, 2022
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.
Conversely, the range of risks for Ethereum with the Merge Update includes the potential technical problems, delays or even a controversial hard fork. For example, a bug had separated the Ethereum chain during a network upgrade in 2020.
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