The Bulls’ Next Set Up for Ethereum

The Downside Target Zone Was Almost Reached, Followed by a Five-waves Rally

Two weeks ago, see here, I found using the Elliott Wave Principle (EWP) count for Ethereum (ETH)

“the expected drop came, but it was also more profound than expected, and ETH broke below the critical Bullish warning levels. As such, the EWP count required a rewrite. The three-waves-down-five-waves-up sequence since the August high was not a W-i/a, -ii/b, -1/a setup, but most likely a complex W-X-pattern with the cryptocurrency now in wave-Y. Although the Y-wave does not have to be comprised of the five orange waves, …, it would allow for a picture-perfect retest of the $1000+/-50 level.”

On November 22, ETH bottomed at $1074.40, which is only off by $24.40 from the ideal $1000+/-50 target zone, and staged the first five-waves rally. See Figure 1 below.

The Bullish Resolution is Still Possible, but $1074 Needs to Hold

Thus, the W-X-Y pattern for red W-ii/b postulated two weeks ago can be considered complete as there are now enough waves in place (five orange waves) from the November 4 high at $1671.48 to the November 22 low. Thus, ETH came within 2.3% of “the five orange waves, as shown in Figure 1, would allow for a picture-perfect retest of the $1000+/-50 level.”

The hourly chart above shows that from that low, ETH did five waves up and three waves down into yesterday’s low: grey W-i, ii, respectively. Today’s rally can therefore be considered orange W-1 of grey W-iii. The cryptocurrency’s price will have to stay above yesterday’s low, especially the November 22 low, to make the ideal impulse path higher as shown in Figure 1.

If ETH fails to do that, the alternative option, as shown in Figure 2 below, comes into play. This option means the cryptocurrency is still in orange W-4 and needs a last W-5 down to ideally $965+/-35 before the following Bullish opportunity/sequence can start.

Thus, as said two weeks ago, “a break back above $1550, with a first warning for the Bears above $1375, is still required to increase the odds W-ii/b has completed and the … rally to $3500+ has restarted.”

From an EWP perspective, full confirmation will be on a break back above the November 4 high. Thus, the Bulls must thread the needle here, especially since a break below the $965+/-35 zone re-opens the door to as low as $750-350.