ETHEREUM’S $4,000 BREAKOUT: IS THE "CUP-AND-HANDLE" PATTERN READY TO IGNITE?

Ethereum (ETH) has officially confirmed a pivotal breakout from a massive “cup-and-handle” pattern, pushing its technical target back toward the psychological $4,000 mark. As of January 14, 2026, the asset is up nearly 7% over the last 24 hours, slicing through a downward-sloping neckline on the 12-hour chart with a surge in green buying volume. While the structural setup is undeniably bullish, on-chain signals like rising unrealized profits for short-term holders and a developing RSI divergence suggest that the path to $4,000 may involve some tactical pullbacks. For now, the bulls have the momentum, but keeping ETH above the $3,250 floor is essential to maintain this newfound trajectory. I. The Cup-and-Handle Confirmation: Targeting $4,010 The recent move above the $3,300 level was not a random spike; it marked the successful completion of a cup-and-handle structure—a classic bullish continuation pattern. Because the neckline was slightly downward-sloping, buyers had to absorb persistent sell pressure across multiple levels before achieving a clean break. The breakout’s validity is supported by expanding volume, which indicates strong institutional or large-scale retail conviction rather than a thin-liquidity drift. Based on the depth of the “cup,” technical analysts have set a primary objective at the $4,010 zone, putting record-level targets back on the roadmap for the first time in 2026. II. The RSI Divergence Risk: A Potential “Momentum Trap”? Despite the strong price action, a bearish divergence is currently forming on the 12-hour Relative Strength Index (RSI). While ETH’s price has pushed to new local highs, the RSI has not yet followed suit, creating lower highs. This signal often warns that the upward momentum is “thinning out” and could lead to a short-term cooling-off period. To nullify this risk, Ethereum needs to sustain a move above $3,360-$3,380 with a rising RSI. If it fails to clear this zone and prints a lower candle, a retest of the breakout point could be in the cards before the next leg higher. III. On-Chain Conviction: Profits Are High, but Selling Is Low On-chain data provides a stabilizing counter-narrative to the momentum risks. The Net Unrealized Profit/Loss (NUPL) for short-term holders has climbed to a two-month high, meaning many recent buyers are now “in the green” and could be tempted to take profits. However, the “spent coins” metric for the 30–60 day age band has actually dropped by nearly 80% from its recent peak. This suggests that while unrealized profits are rising, holder conviction remains incredibly strong; investors are choosing to hold through the breakout rather than rushing to exit, effectively reducing immediate sell-side pressure. IV. Essential Financial Disclaimer This analysis is for informational and educational purposes only and does not constitute financial, investment, or legal advice. Technical chart patterns like the “cup-and-handle” and indicators such as the RSI are probabilistic and do not guarantee future price performance. The $4,010 target is a theoretical projection based on current structural data as of January 2026. Ethereum remains subject to high volatility and significant market risks, particularly regarding short-term holder profit-taking and RSI divergences. Always conduct your own exhaustive research (DYOR) and consult with a licensed financial professional before making any investment decisions.

Do you think Ethereum will hit $4,000 before the end of January, or will the RSI divergence trigger a 10% pullback first?