ETH could recover 60% in the coming sessions as bulls pin their hopes on a classic bullish continuation pattern.

As suggested by independent on-chain analyst Matthew Hyland in a tweet posted on Monday, the price could rally to $6,500 or higher from current levels near $4,211 upon completion of a cup-with-handle pattern.

Perfectly retest cup handle model

According to Hyland's chart, ETH is heading back to the old resistance of the previous cup with a handle (yellow horizontal line in the chart below) in a correction that started after the price hit a record high. $4,867 on 11/10.

The price recovered slightly after testing the resistance of the cup-and-handle pattern as temporary support, raising the possibility of an expansion in the near term.

Weekly ETH/USD Price Chart | Source: TradingView, Matthew Hyland

Usually, the first attempt at a breakout from bullish technical setups usually requires further confirmation.

Notably, ETH's initial uptrend tends to trap two groups of long buyers entering the pattern with hopes of a breakout (but unfortunately a failed breakout) and those pursuing a breakout with small profits. Their positions disappeared after the price reversed a sudden drop, prompting them to defend the position.

But the game changes when the decline stops midway, leading to a strong sideways action or bounce. As a result, short sellers lost confidence, while longs that survived the previous pullback gained confidence in the dominant bullish technical setup.

A positive bounce will set up an optimistic round of movement, thus prompting the price to prepare for the final leg in the pattern – a strong uptrend. As Hyland has suggested, ETH is retesting the “giant cup-with-handle” resistance as support – a potential sign of a strong rebound.

Why $6,500?

A buy point in a cup with a handle occurs when price breaks through resistance along with an increase in volume.

Traders often estimate profit targets by measuring the distance from the right top of the cup to the bottom of the cup and then adding that to the buy point.

Weekly ETH/USD price chart and cup-with-handle profit target | Source: TradingView

The maximum depth of the cup is near $2,500, while the breakout point is around $4,100. Therefore, the breakout target of the pattern is at or above $6,500. Research by Harvard University shows that the cup handle model has a success rate of 65% and 68% respectively for the forex and stock markets.

Conversely, a break below the pattern's resistance – which coincides with multi-month uptrend line support – risks invalidating this bullish pattern. That could lead ETH price to the next support line near $3,090.