Hi traders.
It is the second time that ETH has fallen back into the triangle. This is not a good sign at all. On lower timeframe we see that the moves down are impulse moves.
So, where do we go from here?
On a larger timeframe (4h) we see that a larger ABC makes perfect sense - 5 waves down, 3 up, and again 5 down. I have marked this in red. If this scenario plays out, we can expect a breakdown at this point, because the smaller abc has also completed. In fact, wave C has already started from 2893, shortly before Elon's tweet, and we are currently beginning the 3rd impulse wave down (the waves marked in red). But don't blame Elon, it seems that the market was ready to go lower anyways - his tweet just pulled the trigger, like it did before.
Where do we go in the bearish scenario? We measure wave A (the large one!) and extend it from wave B. Per Elliott rules, we shall look for 1 and 1.618 of wave A, but I suggest we also take 0.618 into account as a truncated C. Yeah, that is pretty scary - all these targets are sub-1800.
In the more hopeful scenario this is a small ABC (the green one) and we can expect a move to the upside soon that will take us back into the 3800 area. In that case we have to re-count the structure and project a new target.
Which move decides everything?
A move above 2893 would invalidate the bearish scenario. We can look for pullbacks to buy into the uptrend. Imo the bearish case is more realistic, and we are already in the middle of it! Shorting small pullbacks to the upside may play out well.
Bearish scenario - red letters/waves
Bullish scenario - green letters/waves
Happy trading!
It is the second time that ETH has fallen back into the triangle. This is not a good sign at all. On lower timeframe we see that the moves down are impulse moves.
So, where do we go from here?
On a larger timeframe (4h) we see that a larger ABC makes perfect sense - 5 waves down, 3 up, and again 5 down. I have marked this in red. If this scenario plays out, we can expect a breakdown at this point, because the smaller abc has also completed. In fact, wave C has already started from 2893, shortly before Elon's tweet, and we are currently beginning the 3rd impulse wave down (the waves marked in red). But don't blame Elon, it seems that the market was ready to go lower anyways - his tweet just pulled the trigger, like it did before.
Where do we go in the bearish scenario? We measure wave A (the large one!) and extend it from wave B. Per Elliott rules, we shall look for 1 and 1.618 of wave A, but I suggest we also take 0.618 into account as a truncated C. Yeah, that is pretty scary - all these targets are sub-1800.
In the more hopeful scenario this is a small ABC (the green one) and we can expect a move to the upside soon that will take us back into the 3800 area. In that case we have to re-count the structure and project a new target.
Which move decides everything?
A move above 2893 would invalidate the bearish scenario. We can look for pullbacks to buy into the uptrend. Imo the bearish case is more realistic, and we are already in the middle of it! Shorting small pullbacks to the upside may play out well.
Bearish scenario - red letters/waves
Bullish scenario - green letters/waves
Happy trading!
Trade active:
It seems the weekend does not bring much clarity in which direction price wants to continue. An inverse H&S on BTC is hopeful for further upside. The DXY speaks for a bearish case though - it is bottoming out and preparing to go higher (DXY and crypto are inversely correlated). DXY trading opens on 6pm ET on Sunday and will gain trading volume on Monday, so we might get a clearer picture in the next hours.