Last week, see here, I found for Ethereum (ETH), aka Ether, “using the Elliott Wave Principle (EWP), I prefer to apply a bullish EWP count. Ideally, ETH bottomed for (blue) Primary wave-IV on July 20th, possibly already June 22nd, and should now be working on a few more minor 4th and 5th waves (green 5, red iii, iv) to complete a more extensive (black) major-1 wave of (blue) Primary-V. This wave-1 should ideally reach around $3000-3300, which aligns well with the triangle breakout target (blue arrows), followed by a wave-2 back to around $2500+/-100. A breakout back above the wave-1 high from those lower levels will then tell me wave-3 is underway. Ultimately, Primary-V should ideally target ~$9K.”
Yesterday, ETH topped at $3274 right in the initial wave-1 target zone of $3000-$3300. Bingo! An easy 15% gain if you’d longed ETH last week based on my insights. So what’s next?
Figure 1. ETH daily chart with EWP count and technical indicators.
Ideally, a pullback and a rally to complete wave-1
Last week I showed you “the traffic light.” It is all green, and ETH is in an uptrend: go! It helps me tell what the short- to long-term trends are and if I should wear a Bullish or Bearish hat. A green traffic light tells me that the odds of good things, i.e., higher prices, are higher than during a red traffic light. The traffic light was right. Now that more price data has become available, I can fine-tune my EWP analysis, and based on the Fibonacci-extension for the current EWP count, as well as the technical indicators, and it appears ETH topped for (red) intermediate wave-iii of (black) major wave-1. Note that in an impulse, the 1st wave is made up of five smaller waves—the red waves in this case.
Thus, we know that after three (iii) comes four (iv), which should ideally fall back to the 100% Fibonacci-extension, possibly as low as the 76.40% extension. See Figure 1. That’s $2866-2697. From there, I then expect a last (red) wave-v to the ideal wave-1 target zone (176.40-200.00% Fib-extension: $3415-3585). However, if ETH does not stop at the 76.40% extension but continues to decline, I have to view wave-1 as already complete and wave-2 underway. In that case, wave-2 should bottom around $2000-2200.
Bottom line: Last week’s assessment for higher prices was correct, and the target zone has been reached. Now ETH should ideally see a short-term pullback and rally (each lasting several days) before seeing a multi-week pullback from where the next big run will start. But, if the Bulls cannot hold support at around $2700, the odds of this multi-week pullback already underway increase tremendously. Last but not least, please always remember market analysts are only human and make mistakes. See my Tweet here. It helps set the right expectations.
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This article was originally posted on FX Empire
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