After reaching an All Time High of approximately 400 USD on 13 June 2017, the ETH/USD pair has been in a correction pattern. I've combined Elliot Wave Theory, Support & Resistance Levels, and a Fibonacci Retracement to create a "Wave Box Theory," which interprets the current correction pattern and may give us clues as to where the ETH/USD pair heads next.
First, here are the Trend Analysis tools I've used, and how I've applied them:
Fibonacci (Fib) Retracement :
Drawn from the lower level of approximately 90 USD on 17 May 2017 up to the ATH 0.83% of approximately 400 USD on 13 June 2017
Support/Resistance -Major Trend Support & Correction Channel
Major trend support level (red line)
Correction channel support and resistance levels (orange lines)
Elliot Wave (EW) Theory :
Applied within the context of the "Wave Box" Theory
After using these tools to analyze the correction wave, I came up with an idea I've dubbed:
"Wave Box Theory"
Noticing that the trend has been bouncing off Fib levels over a regular time interval, I drew these "Wave Boxes-" areas which contain a defined shape or trend over a repeating time interval. The trend oscillates between specific Fib Retracement levels over a period of 10 days, as described below:
The "Wave Box" trend:
-begins at a particular Fib level
-drops 2-3 Fib steps
-rebounds up 1-2 Fib steps
One oscillation or cycle occurs over a 10 day period
I then applied the EW theory within the context of the Wave Boxes. Each box contains two legs of an EW pattern, defined by the oscillation between Fib levels over a 10 day period. Please note- the EW pattern is roughly applied to my analysis, especially during the uptrends within the correction channel.
DISCLAIMER: I realize a mere two oscillations does not indicate a definitive trend pattern that can be counted on to be predictive of future trends, but I found it interesting nonetheless.
What to Expect Next
Scenario 1- "Wave Box" Holds True
If the trend breaks the major trend support level at approximately 220-230 USD, we should see a drop from the 0.382 Fib level to the 0.786 level, with a rebound to the 0.618 level, based on my "Wave Box" theory. EW Theory would indicate that the last rebound would in fact be the end of the correction wave, and we would see the ETH/USD pair return to a bullish trend after hitting the (5) point on the EW pattern. HOWEVER- the lack of any news about ETH could cause correction to continue (no excitement or incentive for investor dollars).
Scenario 2. - Major Support Prevails
The trend bounces off the major trend support level and heads upwards. If EW theory holds true, the EW pattern ends at the major trend support level , the correction is over, and the market reverses to bullish trend. Again, a lack of news could prevent reversal, and the correction continues.
Thanks for your interest, and trade carefully!
First, here are the Trend Analysis tools I've used, and how I've applied them:
Fibonacci (Fib) Retracement :
Drawn from the lower level of approximately 90 USD on 17 May 2017 up to the ATH 0.83% of approximately 400 USD on 13 June 2017
Support/Resistance -Major Trend Support & Correction Channel
Major trend support level (red line)
Correction channel support and resistance levels (orange lines)
Elliot Wave (EW) Theory :
Applied within the context of the "Wave Box" Theory
After using these tools to analyze the correction wave, I came up with an idea I've dubbed:
"Wave Box Theory"
Noticing that the trend has been bouncing off Fib levels over a regular time interval, I drew these "Wave Boxes-" areas which contain a defined shape or trend over a repeating time interval. The trend oscillates between specific Fib Retracement levels over a period of 10 days, as described below:
The "Wave Box" trend:
-begins at a particular Fib level
-drops 2-3 Fib steps
-rebounds up 1-2 Fib steps
One oscillation or cycle occurs over a 10 day period
I then applied the EW theory within the context of the Wave Boxes. Each box contains two legs of an EW pattern, defined by the oscillation between Fib levels over a 10 day period. Please note- the EW pattern is roughly applied to my analysis, especially during the uptrends within the correction channel.
DISCLAIMER: I realize a mere two oscillations does not indicate a definitive trend pattern that can be counted on to be predictive of future trends, but I found it interesting nonetheless.
What to Expect Next
Scenario 1- "Wave Box" Holds True
If the trend breaks the major trend support level at approximately 220-230 USD, we should see a drop from the 0.382 Fib level to the 0.786 level, with a rebound to the 0.618 level, based on my "Wave Box" theory. EW Theory would indicate that the last rebound would in fact be the end of the correction wave, and we would see the ETH/USD pair return to a bullish trend after hitting the (5) point on the EW pattern. HOWEVER- the lack of any news about ETH could cause correction to continue (no excitement or incentive for investor dollars).
Scenario 2. - Major Support Prevails
The trend bounces off the major trend support level and heads upwards. If EW theory holds true, the EW pattern ends at the major trend support level , the correction is over, and the market reverses to bullish trend. Again, a lack of news could prevent reversal, and the correction continues.
Thanks for your interest, and trade carefully!