The bulls have high hopes as ethereum is headed to the cup-and-handle resistance level. The level may act as a support level, which is a sign of a strong rebound ahead.
Bulls are hopeful as the price may rise to or above $6500, from the current levels near $4100 after ethereum started the cup-and-handle trend. This was hinted at by a crypto analyst, Matthew Hyland, in a Monday tweet. According to Matthews’ chart, Ether is headed to the old point of resistance, which was its previous cup-and-handle pattern. This is a corrective move once the crypto hit its record high of $4867 on Sunday, November 10.
After achieving its high, Ether experienced a soft rebound as its interim support level, which increased its possibility of an upside move.
Breakout was an attempt to move out of the bullish technical setup, which needs more confirmation. The gains in the early stages are best appropriate for long buyers; those who
invest when hoping for a breakout that does not happen, and those who chase a breakout but lose out on their profits when the market experiences a bearish reversal. This pushes them to defend their positions.
The trend changes once the prices stop declining, which may either lead to a sideways action or a full-fledged rebound. This makes short sellers lose hope, and long traders who survived the pullback gain confidence in the prevailing bullish technical setup.
There is a bullish feedback loop through a positive rebound, which makes the price have an uptrend possibility.
Is $6500 significant?
According to Matthew, Ether is trying to resist the substantial cup-and-handle pattern resistance support, which signals the possibility of a sharp rebound. Once the price breaks above the resistance level, it changes the cup-and-handle pattern, increasing the trading volumes.
Traders usually estimate their profit target by measuring the length between the top of the cup to its bottom with an addition of the buying point.
As for the 6.5k level, the cup’s maximum depth is almost $2500, with a breakup point of around $4100. From this trend, the breakout target is likely to be at about $6500.
According to research done by Harvard, cup-and-handles typically have a 65% and a 68% success rate for forex and stock markets.
When the price breaks below the resistance level, it risks a bullish setup. This may lower the support level to about 3090.