ETH: Touch to trend line (as high as $555), then fall to ???
I've been analyzing ETH ( Ethereum -0.81% ) for a while now, and it might (?) be coming together for me. The above is my current operating thesis. Let me know what you think in the comments below! Like if you agree, disagree but appreciate the idea, or if you have no clue what I'm talking about and/or could care less about ETH but just want to give this idea thumbs up anyway.
So, the chart has been telling me for a while that ETH completed a major wave 3 complex when it reached $1400. Since then ETH has been falling with bounces at various points as it has intersected trend lines to complete a 5th wave at those points or when it met important technical milestones. After these bounces, it has resumed its fall to the next lower trend line. At some point (possibly soon) ETH will run out of trend lines!
As the chart above shows, I see that ETH is currently working on the C wave of an A-B-C correction (green lines) of wave 3. Based on a 1:1.618 extension of the A wave of this complex, I get a target of $200 for the possible end of wave C. Note that this is all charted on the log scale chart, and I'm not guaranteeing we get a 1.618 extension...it is just a reasonable target to consider. From my extensive recent personal charting of cryptocurrencies, 1:1.618 extensions within the ABC corrective waves appear to be extremely common. The fact that ETH has already exceeded the 1:1 extension point leaves the 1:1.618 extension as the next most likely option.
Also, when we look at the ongoing C wave, we see that ETH's fall from the $1260's to $560's (wave 1 of the C wave) was a 55% drop in price. The retracement via wave 2 was somewhat flat in shape and was almost exactly 61.8% (missed by a few dollars).
Wave 3 fell from $870's to $350's, and this was about a 59% drop in price. ETH is currently working on wave 4, and based on Elliott Wave theory, this should be a sharp wave, it should not move into wave 2 territory (thus it cannot get beyond about $560), and it will likely retrace about 38.2% of the wave 3 movement. A 38.2% retracement of wave 3 would put ETH at right around $555. This would meet all of the appropriate Elliott Wave theory criteria, and it would set ETH up nicely for a touch to the current trend line that is forming off of waves 1 and 2 on the log scale chart.
After this move to as high as $555, I am looking for ETH to fall over the next 1-2 months. A potential target for ETH would be as low as $200. This would be a 64% drop from $555, and it would intersect what might be the last probable significant trend line where a 5th wave of this bull cycle could be put in. If the low points of waves 1 and 3 (or the starting points of waves 2 and 4) are connected with a line, this intersects $200 at a point that would fit nicely on the prospective brown logarithmic trend line that has its origins almost one and a half years ago.
Conclusions: If ETH moves above $560-570, I would say my analysis above is most likely wrong and you can ignore it.
On the other hand: If ETH hits the above trend line at $555 (or below) and then falls (possibly somewhat sharply), it might be wise to prepare for wave 5 down. At this point, I would start looking for as many trend lines as one could find between $555 and $200 for possible bounce regions. I'm not 100% sure (who is) ETH gets to $200 (wave 5 down could be truncated and drop minimally), but I would certainly see this as a strong candidate for an entry point to play the bullish wave 5 bounce that is depicted in light blue (though this bounce could also be somewhat truncated, so stop losses would be important as always with cryptos). If the purple trend line as drawn based on waves 1 and 2 holds as wave 4 completes and 5 begins, then I would look at any movement across/above this trend line after the start of wave 5 down as the termination of wave C, a bullish move, and a potential entry point for a long trade.
So, the chart has been telling me for a while that ETH completed a major wave 3 complex when it reached $1400. Since then ETH has been falling with bounces at various points as it has intersected trend lines to complete a 5th wave at those points or when it met important technical milestones. After these bounces, it has resumed its fall to the next lower trend line. At some point (possibly soon) ETH will run out of trend lines!
As the chart above shows, I see that ETH is currently working on the C wave of an A-B-C correction (green lines) of wave 3. Based on a 1:1.618 extension of the A wave of this complex, I get a target of $200 for the possible end of wave C. Note that this is all charted on the log scale chart, and I'm not guaranteeing we get a 1.618 extension...it is just a reasonable target to consider. From my extensive recent personal charting of cryptocurrencies, 1:1.618 extensions within the ABC corrective waves appear to be extremely common. The fact that ETH has already exceeded the 1:1 extension point leaves the 1:1.618 extension as the next most likely option.
Also, when we look at the ongoing C wave, we see that ETH's fall from the $1260's to $560's (wave 1 of the C wave) was a 55% drop in price. The retracement via wave 2 was somewhat flat in shape and was almost exactly 61.8% (missed by a few dollars).
Wave 3 fell from $870's to $350's, and this was about a 59% drop in price. ETH is currently working on wave 4, and based on Elliott Wave theory, this should be a sharp wave, it should not move into wave 2 territory (thus it cannot get beyond about $560), and it will likely retrace about 38.2% of the wave 3 movement. A 38.2% retracement of wave 3 would put ETH at right around $555. This would meet all of the appropriate Elliott Wave theory criteria, and it would set ETH up nicely for a touch to the current trend line that is forming off of waves 1 and 2 on the log scale chart.
After this move to as high as $555, I am looking for ETH to fall over the next 1-2 months. A potential target for ETH would be as low as $200. This would be a 64% drop from $555, and it would intersect what might be the last probable significant trend line where a 5th wave of this bull cycle could be put in. If the low points of waves 1 and 3 (or the starting points of waves 2 and 4) are connected with a line, this intersects $200 at a point that would fit nicely on the prospective brown logarithmic trend line that has its origins almost one and a half years ago.
Conclusions: If ETH moves above $560-570, I would say my analysis above is most likely wrong and you can ignore it.
On the other hand: If ETH hits the above trend line at $555 (or below) and then falls (possibly somewhat sharply), it might be wise to prepare for wave 5 down. At this point, I would start looking for as many trend lines as one could find between $555 and $200 for possible bounce regions. I'm not 100% sure (who is) ETH gets to $200 (wave 5 down could be truncated and drop minimally), but I would certainly see this as a strong candidate for an entry point to play the bullish wave 5 bounce that is depicted in light blue (though this bounce could also be somewhat truncated, so stop losses would be important as always with cryptos). If the purple trend line as drawn based on waves 1 and 2 holds as wave 4 completes and 5 begins, then I would look at any movement across/above this trend line after the start of wave 5 down as the termination of wave C, a bullish move, and a potential entry point for a long trade.
Order cancelled:
Well, ETH traveled the path predicted to the trend line touching at $545ish, it took a pause there, and then proceeded to cross the trend line as I discussed as a possibility. That cross of the trend line was the signal to initiate (or maintain) a long position because the downtrend as was considered/expected was no longer going to materialize. Instead we have to look for new lines of resistance and a new pattern. I remain skeptical that ETH won't retest or exceed the recent lows near $360, but clearly the bulls have control for the time so one should run with them.
ETH has now retraced beyond $555 area which was the 38.2% retracement of the most recent 5 waves down, so I am now looking for a continuation of this current move up toward the 50% retracement zone at $614 or even the 61.8% retracement zone at $675.
My next ideas for ETH will be on a new post. Even though the fall at the trend line did not materialize, I hope this idea was useful to help identify the initial move to the trend line where one could have realized a $40 gain from the time of posting when ETH was $505 till the trend line touch at $545 (where a position could have been closed until the next move was clear). A sell there and then a repurchase after a cross of the trend line would have been another profitable position ($40 roughly minus any trading fees as of ETH price of $585 now).
ETH has now retraced beyond $555 area which was the 38.2% retracement of the most recent 5 waves down, so I am now looking for a continuation of this current move up toward the 50% retracement zone at $614 or even the 61.8% retracement zone at $675.
My next ideas for ETH will be on a new post. Even though the fall at the trend line did not materialize, I hope this idea was useful to help identify the initial move to the trend line where one could have realized a $40 gain from the time of posting when ETH was $505 till the trend line touch at $545 (where a position could have been closed until the next move was clear). A sell there and then a repurchase after a cross of the trend line would have been another profitable position ($40 roughly minus any trading fees as of ETH price of $585 now).
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