Ethereum, the second-largest cryptocurrency by market capitalization, is currently exhibiting a technical pattern that has traders and analysts buzzing: the Cup and Handle. Miles O’Connor, a very intelligent and witty altcoin economic wonk, unpacks this meme. He shares what it means for Ethereum’s potential price action moving forward.

Understanding the Cup and Handle Pattern

The Cup and Handle pattern indicates powerful bullish momentum. Its name derives from the fact that it appears as a teacup with a handle. It’s not just a sign of strength, it’s a bullish signal that an existing uptrend is almost assuredly going to continue. This pattern often builds over the course of weeks or even months. Once you spot it on longer-term charts, it turns into a reliable frickin’ indicator. The “cup” part shows a rounded bottom, indicative of a period of price consolidation. Next, the “handle” spends a few months exhibiting a slight downward drift or sideways consolidation.

To make sure the pattern works, the “cup” needs to have a soft, gentle arc. Furthermore, the “handle” must not go back down past halfway up the “cup.” The shorter the handle, the stronger the breakout. Traders dramatically anticipate a breakout above the resistance level at the top of the cup. They perceive this as a bullish buy signal and expect the uptrend to continue.

Ethereum's Cup and Handle Formation

At present, the ETH/USD market is in fact forming the bullish continuation pattern Cup and Handle on its weekly chart. Weekly charts provide a cleaner, smoother and overall more accurate picture than daily or intra-day charts. This is key, as they smooth out short-term market fluctuations. If this pattern develops as anticipated, Ethereum may be poised for a major bullish move in price.

For Sathvik Vishwanath, co-founder and CEO of Unocoin, Ethereum has the potential to spike if it can get over the $4,000 resistance area. He estimates this change could aim $4,200. Analysts are forecasting that there’s almost 49% upside to be had. This estimate provided is between the top and bottom of the formation Cup & Handle. Should Ethereum manage to close above the $3,700 resistance level, it has the potential to move into price discovery. Such a move would likely pave the way for new all-time highs in 2026. Ethereum Price Prediction suggests a rally toward $4,000+ by late 2025, with a potential retest of ATH near $4,900 by year-end.

Key Support and Resistance Levels

Finding the most important support and resistance levels is an important step for any trader wanting to profit from the Cup and Handle pattern. These levels serve as possible buy zones and points of failure, helping to guide risk management decisions.

Support Levels

  • $1,200 Level: This is considered a critical support level. If the current downtrend continues, this could be a significant buy zone for ETH.
  • $1,500 Support Zone: Historically, this zone has served as a launching point for strong recoveries, making it another area to watch for potential buying opportunities.
  • $2,250–$2,290 Zone: This zone is viewed as a dynamic support area, and buying opportunity. This area has been considered a pivotal battleground between buyers and sellers.
  • Calculated Support Levels: Traders can also use pivot points to identify potential support levels:
    • 1st Support Level (S1): calculated as (2 * PP) - H
    • 2nd Support Level (S2): calculated as PP - (R1 - S1)
    • 3rd Support Level (S3): calculated as L - (2 * (H - PP))

Resistance Levels

  • $2,350: This level has acted as resistance. Failure to sustainably climb above it could lead to a slide toward $2,000.
  • $2,850: This is a critical resistance level where buy-side liquidity is accumulating. Seller interest remains high at this level, so overcoming it is essential for the bullish scenario to play out.
  • Calculated Resistance Levels: Traders can also use pivot points to identify potential resistance levels:
    • 1st Resistance Level (R1): calculated as (2 * PP) - L

Risk Management Strategies

Here are some risk management strategies to consider when trading Ethereum based on this pattern:

  1. Entry Points: Consider entering a long position on a confirmed breakout above the resistance level formed by the top of the cup (around $2,850). Alternatively, look for pullbacks to support levels as potential entry points.
  2. Stop-Loss Orders: Place stop-loss orders below key support levels to limit potential losses. For example, a stop-loss order below the $2,250–$2,290 zone would protect against a breakdown of that support area.
  3. Take-Profit Targets: Set take-profit targets based on the potential upside of the Cup and Handle pattern. The $4,200 target is one potential level, but traders may also consider scaling out of their positions at intermediate resistance levels.
  4. Position Sizing: Adjust position sizes to account for the risk involved. Avoid allocating a large portion of your portfolio to a single trade.

Learn to Identify the Cup and Handle pattern to take your trading to the next level. Know where Ethereum’s most important support and resistance levels are, and establish good risk management practices to trade Ethereum’s price movements more successfully.