Ethereum: Is The Low-Risk Buying Opportunity Here?
Last week, see my most recent article here; using the Elliott Wave Principle (EWP), I was looking for Ethereum (ETH) to continue to rally. I was wrong. Yes, I admit it: I was wrong. By recognizing one is wrong, one can then right the wrong and get back on track. Or, as I remind my premium crypto trading members,
“Please remember, my work is ~70% reliable and ~90% accurate. Thus, we must have realistic expectations and not expect perfection and zero bad calls in a dynamic, stochastic, probabilistic environment. Thus, all we can do is “anticipate, monitor, and adjust if necessary.”
Hence, I, and anybody else for that matter, cannot be right all the time because nobody is perfect. I, therefore, always provide my members with, in this case, downside cut-off levels, which can be used as stops, that help us identify further upside is less likely: I always assume my work is wrong till proven right. That said, what is going on with Ethereum instead? Figure 1 below has my revised and preferred EWP count, which aligns better with Bitcoin (BTC). See my recent article here.
Figure 1. ETH daily chart with EWP count and technical indicators.
2nd Wave should now be underway
I have adjusted the preferred EWP count to show how a potential impulse started late September with a failed smaller wave-5 of wave-c of wave-2. From there, a picture-perfect five waves up into the recent all-time high can be assessed: (green) minor-4 was a classic flat and minor-5 a classic ending diagonal.
The “nice” thing with diagonals is that, once they complete, the price often retraces most of it. In this case, that means a drop back down to around $3900 (purple horizontal line). That level is, coincidentally enough, also horizontal support. Besides, the typical wave-ii retrace zone is right around that level as well (red square).
From a technical perspective, there was negative divergence on the Money Flow Indicator (MFI) and MACD histogram (dotted red arrows), but not on the actual MACD line and Relative Strength Indicator (RSI14). Thus, the former two suggested a correction, whereas the latter two did not. Bit of a mismatch. But now all are aligning again, as these indicators are becoming oversold. And once all the selling is over, only buying is left. What does it take to know the wave-ii low is in place?
- The first sign is a daily close back above yesterdays’ high (high-risk long trade)
- The second sign is a daily close back above horizontal resistance at $4500 (medium-risk long trade)
- Full confirmation is on a new ATH (low-risk long trade).
Bottom line: The “mild wave-ii pullback” I anticipated three weeks ago was incorrect, and it was most likely only a more minor 4th wave within a more significant rally. I apologize for the error, and I cannot be right all the time. By admitting the mistake, I can now objectively re-analyze the charts and conclude a 2nd wave is most likely ongoing, similarly to what Bitcoin (BTC) should be going through: see here. I anticipate ETH to bottom around $3800+/-200 before staging its next rally. It will then have to take out those mentioned above, successive, upside levels to tell us its true intentions.