Ethereum Classic (CRYPTO: ETC) was trading flat on Friday after a bullish day during Thursday’s 24-hour trading session caused the crypto to soar up 8.32%.
The crypto has settled into two visible patterns on the daily chart, with the short-term pattern being an inside bar formation and a cup-and-handle possibly forming as the longer-term pattern.
A cup-and-handle pattern can be either a powerful reversal indicator when found at the bottom of a downtrend or a continuation pattern when found in an uptrend.
The pattern is formed when a security forms a rounded trough (cup) and then rises upwards before consolidating downward between two parallel lines (handle). The handle should begin to form before the stock has risen up as high as the top of the left side of the cup.
When the security breaks up through the handle on higher-than-average volume, it indicates the pattern was recognized, and a rally may follow.
- Aggressive bullish traders may choose to enter a security in a cup-and-handle pattern on the initial rise, with a stop below the lowest price in the cup. More conservative traders may wait to enter a position on a break up from the handle of the pattern on higher-than-average volume.
- Bearish traders may wait to enter into a position if the security falls below the lowest price within the cup formation, which negates the bullish cup-and-shoulder pattern and indicates an accelerated move to the downside may follow.
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The Ethereum Classic Chart: Ethereum Classic’s cup-and-handle pattern has possibly been created with the cup formed between July 29 and Thursday and the handle beginning to form during Friday’s session.
Traders can watch for the handle to continue to develop over the coming days, and if that happens then a break up from the upper descending trendline of the handle on high volume would confirm the pattern was recognized.
- The cryptos inside bar pattern was being created during Friday’s session, with all of Friday’s price action taking place within Thursday’s trading range. The pattern leans bullish because Ethereum Classic was trading higher before forming the inside bar. If the inside bar pattern becomes dominant and Ethereum Classic breaks up from the mother bar over the weekend, the cup-and-handle pattern will be invalidated.
- When Ethereum Classic blasted higher during Thursday’s session, the crypto confirmed it was trading in a new uptrend by printing a higher high above Aug. 8 high of $39.73. The most recent higher low within the pattern was printed on Aug. 9 and $35.53, and as long as Ethereum doesn’t retrace below that level on the next leg down, the uptrend will remain intact.
- Bearish traders will be watching for buyers to become exhausted and begin to exit their positions. Ethereum Classic relative strength index (RSI) has been measuring in between 60% and 82% since July 16, and the crypto will eventually need a long period of consolidation or a drop lower in order to cool the level.
- Ethereum Classic has resistance above at $44.66 and $47.93 and support below at $41.41 and $38.95.
