Unlocking the Potential: Exploring the Validity of the Speculative Cup and Handle Pattern in Cryptocurrency Trading

After the recent correction, the previous assumptions about the cup and handle pattern have evolved. Initially considered speculative due to the absence of a defined handle, the current retracement and duration of daily candles indicate the formation of a legitimate handle. While there are still speculative elements in the chart, a rough estimate for the handle's length has been illustrated with red trendlines, allowing for potential price movements within defined parameters. The handle's depth has been approximated around the daily 50MA (in orange), serving as a midpoint for potential price fluctuations. The placement of the dotted green measured move line remains speculative until a breakout is confirmed, with a target projection around $130k or higher anticipated. Exploring a more bearish scenario, the cup's rimline has been mirrored at the bottom to create a channel, showing significant candlestick interactions that validate both the cup and handle pattern and the channel. While the likelihood of a severe market event disrupting the cup and handle pattern is lower, a potential retest of the channel's bottom trendline could present a compelling opportunity for accumulation at a lower price point. This alternative scenario, though less probable, offers the potential for increased gains from the bottom of the channel to the breakout target compared to a straightforward cup and handle breakout. While the breakout from the cup and handle pattern appears to be the more probable outcome, acknowledging and preparing for less likely scenarios is crucial. Regardless of the eventual market movement, the situation presents opportunities for strategic decision-making and potential gains. *This is not financial advice.*

A retest of the lower trendline of the channel could result in a correction of around 72-74%. While this may seem unlikely during a bullish market, it's essential to recall that the significant correction caused by the Covid black swan event occurred during a bull run and was nearly as large. Therefore, although improbable, the possibility of such a correction cannot be disregarded.

The cup's handle seems to be forming an inverse head and shoulders pattern. When this pattern triggers, it is likely to push the price above the cup's rimline. It's uncertain how soon this will happen, possibly this month or maybe not until August. There is also a possibility that a significant capitulation flash crash could nullify the inverse head and shoulders pattern. However, currently, I believe the probability still leans towards it being confirmed in the end.