Ethereum gained approximately 7% over 24 hours to $3,328, completing a cup-and-handle breakout that technical analysts say could push the second-largest cryptocurrency toward $4,000.
The breakout occurred on January 13 with expanding volume, a key confirmation signal that distinguishes sustained moves from false breakouts.
The pattern's measured move projects a target around $4,010, though several momentum and on-chain indicators suggest the rally may face resistance before reaching that level.
Technical Structure Confirms Breakout
Ethereum's 12-hour chart shows a completed cup-and-handle formation with a downward-sloping neckline, which required buyers to absorb selling pressure across multiple price levels rather than clearing a single resistance point.
The cryptocurrency pushed through the neckline with strong volume on January 13, validating the pattern according to technical analysis standards.
However, the Relative Strength Index shows a potential bearish divergence where price makes higher highs while RSI makes lower highs, typically signaling weakening momentum.
Between January 6 and January 14, Ethereum's price advanced but RSI failed to confirm that strength, creating conditional downside risk if the divergence completes.
On-Chain Metrics Signal Caution
Short-term holder Net Unrealized Profit/Loss has risen to its highest level in approximately two months, indicating more recent buyers are sitting on profits and may be tempted to sell.
The last time this metric peaked in early January, Ethereum declined roughly 6% from $3,295 to $3,090 within days.
However, spent coins activity tracking recently acquired tokens being moved or sold dropped nearly 80% from recent peaks over the past 24 hours, suggesting holders aren't yet distributing despite unrealized profits.
Key Levels To Watch
Holding above $3,250-$3,270 keeps the breakout structure intact, while a sustained move above $3,360-$3,380 would likely nullify the RSI divergence risk and allow momentum to rebuild.
A clean close above this zone would strengthen the case for continuation toward $3,580, then $3,910, and eventually the $4,000-$4,010 target area.
If momentum risk materializes instead, losing $3,250 would weaken the short-term structure with $3,180 and $3,050 becoming relevant as potential support zones.