Ethereum’s price action since October 2021 has displayed the formation of a massive, multi-year cup and handle pattern. This bullish technical setup is characterized by a rounded bottom termed the “cup,” followed by a minor retracement forming either a descending parallel channel or another rounded bottom known as the “handle.” The pattern also includes a resistance level that connects the key swing points of the cup and handle. A breakout from this resistance, confirmed by flipping it into a support level, is crucial for validating this bullish structure.
So far, Ethereum’s attempts to break through this resistance have been unsuccessful. However, the start of the new year could provide the necessary momentum to breach these levels and ignite a significant rally.
Price Prediction and Targets
Ethereum price prediction based on the theoretical forecasting of the cup and handle pattern suggests a conservative target of $6,078 and an ambitious target of $12,480. The $6,078 target is calculated by measuring the depth of the cup from its right-most swing high and adding this value to the breakout point after the handle. On the other hand, the exaggerated target surpasses the psychological $10,000 mark, aiming for $12,480. Such a rally would signify a monumental milestone for Ethereum, reinforcing its dominance in the cryptocurrency market.
Potential Risks and Correlation with Bitcoin
While the technical indicators and historical data present a bullish narrative for Ethereum, it’s essential to consider Bitcoin’s influence. Currently, BTC appears weak as it trades around $93,000, with signs of further decline to $80,000. Veteran trader Peter Brandt has highlighted a bearish head-and-shoulders pattern in Bitcoin, with a theoretical target of $78,000.
If Bitcoin continues its downward trajectory, it could undermine Ethereum’s bullish setup and potentially lead to a crash in ETH’s price, targeting levels as low as $2,600. Investors are advised to remain cautious and closely monitor Bitcoin’s movements, as they could significantly impact Ethereum’s price dynamics.
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