Ethereum (ETH) Forms Cup and Handle Pattern, Hints at $4,000 Recovery

Key Takeaways

• Ethereum price has formed a bullish pattern but needs to breach the resistance around $3,326.
• The CMF indicates that the market is buying the ETH dip and supporting the price forecast.
• With support at $2,434 and low selling pressure, the GIOM shows that ETH’s breakout is close.

Earlier today, Ethereum’s (ETH) price slid below $2,700 for the first time since November. But that decline did not last, and the price looks ready to retest $2,800 again.

ETH’s performance over the last seven days has resulted in a 17% decline. However, the cryptocurrency has now formed a bullish pattern associated with strong upside potential.

This technical pattern suggests that ETH’s price could reclaim a price level that some analysts think has eluded it for the rest of this cycle.

ETH Price Seems to Have Hit the Bottom

Ethereum price last reached $4,000 on Dec. 6, 2024. Since then, the cryptocurrency has been trading within a descending channel and losing key support points at several intervals.

Interestingly, this price decline and the falling channel have formed a cup and handle pattern. A cup and handle pattern is a bullish pattern resembling a ‘U’ (the cup), followed by a slight downtrend forming the handle.

This pattern indicates a continuation of an uptrend, as the pattern reflects a period of consolidation before a breakout. However, to validate the breakout, the price has to break above the handle’s resistance.

As of this writing, the handle’s resistance sits between $3,180 and $3,326. Though ETH has yet to break above these levels, the Chaikin Money Flow (CMF) reading, which has risen to the positive region, reveals that cryptocurrency might soon breach the point.

Once achieved, the cup and handle breakout might lead Ethereum’s price toward the $4,000 mark.

On-Chain Analysis Supports the Thesis

From an on-chain point of view, the Global In/Out of Money Around Price (GIOM) shows that a rally toward $4,000 is possible.

The GIOM metric groups all addresses into clusters based on the number of addresses (or volume) that were previously bought at specific price ranges.

Larger clusters indicate significant support or resistance levels, representing areas where many investors accumulated. Buying pressure may increase if the price approaches a heavily populated support cluster, preventing further declines.

On the other hand, a large resistance cluster could lead to selling pressure, making it difficult for the asset to break higher. According to IntoTheBlock, the major support for ETH lies around $2,434.

At this average price, 12.14 million addresses purchased over 62 million ETH. The volume in this region is higher than at each of the levels between $2,872 and $4,816.

Therefore, it is likely that sustained buying pressure could drive ETH’s price higher, making it possible to reach $4,000. In a highly bullish market condition, ETH might jump above $4,500.

However, if the cryptocurrency refrains from breaching the cup and handles resistance, this prediction might not happen. Instead, Ethereum’s price might tumble below $2,000, which could lead to a bear cycle.