Ethereum’s native Ether (ETH) token rallied 40% against Bitcoin (BTC) after hitting a local low of 0.049 on June 13. Now, ETH/BTC is at two-month highs and may extend its rally in the coming weeks, according to a classic technical pattern.
ETH painted cup and handle pattern
Specifically, ETH/BTC has been forming a “cup and handle” on its lower range charts since July 18.
A cup and handle pattern usually appears when the price goes down and then rebounds in what appears to be a U-shaped breakout, resembling a “cup”. Meanwhile, the rally leads to a pullback, in which price trends fall within a descending channel called a “handle”.
The pattern resolves after prices rise to roughly the same size as 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 may continue a rally towards neckline resistance near 0.071 BTC. Subsequently, a decisive breakout of the cup and handle above the neckline level could take ETH/BTC to 0.072, up 12.75% from today’s price.
The success rate of the cup-and-loop model in reaching your profit target is 61%, according to veteran investor Tom Bulkowski.
The bullish setup for ETH/BTC is also inspired by the transition of the Ethereum network from proof-of-work (PoW) to proof-of-stake (PoS) potentially via “the merger” scheduled for mid-September.
Related: Will Ethereum Merge Hopium Continue, Or Is It A Bull Trap?
Meanwhile, market analyst Michaël van de Poppe it’s that Ether may see more upside over Bitcoin due to meltdown hype as momentum builds in the coming weeks.
Basically a few levels in $ETH.
Facing resistance at 0.0725 $BTC.
In general, a further push 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 cup and handle profit target, as interim resistance while holding the 0.0645 or 0.057 level as support.
Rather, the range of risks for Ethereum with the Merge Update includes 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 the views of Cointelegraph.com. Every investment and trading move involves risk, you should do your own research when making a decision.