Ethereum's native asset, Ether (ETH), may rebound past nearly 60% in the coming sessions equally bulls pin their hopes on a classic bullish continuation pattern.

Prices may rise to or higher up $half dozen,500 from their electric current levels nearly $4,100 subsequently completing a cup-and-handle formation, hinted Matthew Hyland, an independent on-chain analyst, in a tweet published Monday.

A perfect loving cup and handle retest

Hyland'due south nautical chart shows Ether returning to the old point of resistance of its previous cup and handle pattern (the yellow horizontal line in the nautical chart below), in a corrective motion that started after the cryptocurrency reached its record loftier of $4,867 on November. 10 (data from Coinbase).

Ether underwent a soft rebound after testing the cup and handle resistance as its interim support, raising possibilities of an extended move upside ahead.

ETH/USD weekly price chart. Source: TradingView, Matthew Hyland

In detail, the start breakout attempts out of bullish technical setups typically require additional confirmation.

Notably, these early gains tend to trap ii groups of buyers: longs who enter deep in the pattern hoping for a breakout (which fails), and longs who chase the breakout just see their minor profit evaporate following sudden bearish reversals, which prompt them to defend their positions.

But the tables turn when the reject stalls midway, which either leads to sideways action or a total-fledged rebound. As a result, short sellers lose conviction, while longs who survived the previous pullback gain conviction in the prevailing bullish technical setup.

A positive rebound sets a bullish feedback loop in motility, thus prompting the price to set for the final leg in the pattern — a strong uptrend. Every bit Hyland hinted, Ether'due south retesting the "huge Loving cup & Handle design" resistance as support appeared perfect — a potential cue for a sharp rebound.

Why $vi,500?

The buy signal in a cup and handle pattern emerges when the price breaks above its resistance level with an increase in trading volumes.

Traders typically estimate their profit target by measuring the distance from the loving cup'south right tiptop to its bottom and then adding the number to the buy betoken.

ETH/USD weekly price chart featuring loving cup-and-handle profit target. Source: TradingView

The cup'southward maximum depth is nearly $ii,500, while its breakout point is around $iv,100. Every bit a outcome, the design'south breakout target comes to be at or above $6,500. A Harvard study shows that cup and handles accept a 65% and 68% success rate for forex and stock markets, respectively.

Related: Analysts say 'impulse movement' could send Ethereum cost into the $6K to $14K range

Conversely, breaking below the design's resistance level — congruent with multi-month rising trendline support — risks invalidating the bullish setup. That may lead Ether's toll to the next back up line near $3,090.

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