We Got the “Pullback, Rally,” Expect a More Significant Pullback Soon

Last week, see here, I was looking for a smaller degree 4th wave pullback, then a 5th wave rally to complete a larger 1st wave top. Ethereum, aka Ether (ETH), took a slight detour by first rallying to the ideal 161.80% extension for a b-wave and then dropped into this week’s low for what is most likely the c-wave of wave-iv and wave-v (the “Rally”) to ideally $3415-3585 should now be underway. See Figure 1 below.

Figure 1. ETH daily chart with EWP count and technical indicators.

The pullback came and went, now in the rally to complete wave-1

Elliott Wave Principle (EWP) fourth waves are inherently difficult to forecast, track, and trade, and the last few days showed once again this is the case. Namely, what we got was most likely an irregular flat 4th wave, where the (green) b-wave topped above the end of the 3rd wave (red wave-iii). Since corrections, and flat waves, in particular, are always made up of at least three waves (a, b,c), we know that “after wave-b, comes wave-c” and in this case (green) wave-c of (Red) wave-iv bottomed on Wednesday.

Albeit not shown, 4th waves typically retrace between 23.60 and 38.20% of the prior 3rd wave, which would be the $2935-2785 zone. ETH bottomed at $2952 on Wednesday, off by 0.58% and thus close enough (well within the margins of error!). Therefore, as long as this low holds, we should expect ETH to reach the ideal wave-v of the wave-1 target zone of $3415-3585. From there, a multi-week correction, wave-2, should unfold. See Figure 1 above. It can target anywhere between $2145-2865 depending on how deep or shallow this wave-2 will become. It is impossible to know beforehand.

However, typically 2nd waves retrace about 50-62% of the entire prior 1st wave, so I anticipate for now -without having any data at hand yet to confirm a bottom in the $2380-2590 zone (orange rectangle). Once more price data becomes available, I can fine-tune this pending and anticipated low. Remember, all we can do is “anticipate, monitor, and adjust”. But few methods, if any, can already make such forecasts as the EWP can. For now, ETH has topped and bottomed where it should for a smaller 3rd and a 4th wave, so there’s nothing yet to suggest the minor 5th wave and more significant 2nd wave will not unfold as anticipated.

Last but not least, please note how price reached the (blue arrow) symmetry breakout target to the T. When classic Technical Analysis and the EWP align, price forecast can be very accurate and reliable. Now “the traffic light” is also back to full green, so I expect higher prices over the next few days.

Bottom line: The devil is always in the details, and one can therefore not foresee every move. The anticipated “pullback” became a bit more complex, but ETH is overall tracking along with the preferred EWP impulse pattern well. As such, my premium crypto trading members knew exactly where to expect the pullback bottom and subsequent rally. Thus, as long as this low holds, we should expect ETH to reach the ideal wave-v of the wave-1 target zone of $3415-3585. From there, I still anticipate a correction back to the mid-$2000s before the rally to new All-time highs should kick in.

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This article was originally posted on FX Empire


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