The floppening? Ethereum price weakens post-Merge, risking 55% drop against Bitcoin
Ethereum's native token Ether (ETH) has been forming an inverse-cup-and-handle pattern since May 2021 on the weekly chart, which hints at a potential decline against Bitcoin (BTC).
An inverse cup-and-handle is a bearish reversal pattern, accompanied by lower trading volume. It typically resolves after the price breaks below its support level, followed by a fall toward the level at a length equal to the maximum height between the cup's peak and the support line.
Applying the theoretical definition on ETH/BTC's weekly chart presents 0.03 BTC as its next downside target, down around 55% from today's price.
Alternatively, the ETH/BTC pair could nevertheless deliver some large gains in the years to come.
On the weekly log chart, the ETH/BTC pair is painting a potential cup-and-handle since January 2018. In other words, a rally toward 0.5 BTC in 2023 is on the table, up more than 520% from current price levels.
Unlike its inverse counterpart mentioned above, cup-and-handles are bullish reversal patterns with their upside targets located at levels equal to their maximum height when measured from their breakout point.
Veteran analyst Tom Bulkowski notes that these patterns have a 61% success rate of meeting their upside targets.
For instance, the cup-and-handle pattern that formed on the Dow Jones chart during the Great Depression of the 1930s and 1940s — wherein the cup took nine years to develop and the handle another four years — reached its upside target in the 1950s, as shown below.
Potentially, ETH/BTC could now be in the handle stage of a similar cup-and-handle pattern, as shown via the shaded purple descending channel area in the chart below.
The pair awaits a breakout move above the pattern's resistance level of 0.08 BTC. For
Read more on cointelegraph.com
