ETH - Reality can be as low as $15
Updated
At a first glance on the weekly chart, it looks like ETH is done with its impulsive 5 waves bull rally of 1.1 million % growth starting from Aug 2015 and Ending in Jan 2018, with 2017 being parabolic which is congruent with an extended 5th wave
Here is why I think this is a perfect textbook style 1st cycle of 5 waves
After every 5 wave bull cycle, there is a deeper ABC correction that goes up to 50% retracement or 0.618. Extended 5th wave cycles also correct sharp & deep, the textbook guideline says till wave2 (here blue) of the 5th wave (green)
Here is the confluence for $15 correctionn
An optimistic target can be $50 which 0.618 of (A), see blue line in below chart. It is also 0.382 Fib of the entire rally from 2015 - 2017. This target could be achieved by June 2020
RSI evidence
RSI on the weekly appears to be in a downward channel and keeps getting rejected at the channel, recently in 2019 runup, it made a double top and dropped below. I consider RSI below 50 bearish, and after a 2nd attempt to breakthrough it failed again (red arrows)
2019 Rally was the perfect Bull Trap
As per my major assumption we are in an ABC correction, where A downtrend was completed by Dec 2018 ($75), and the subsequent rally was actually the B wave ($360)
Unlike an impulsive wave, a B wave is a corrective wave which has 3 subwaves and usually confined within a channel
Reasons to think its a B wave
Wave Psychology
Elliott Wave is based of human psychology of Greed and Fear. So the top of the 5th wave is extreme greed and bottom of C wave is fear. So the 5th wave (blue) of the 5th wave (green) is euphoria, this happens to be after Oct 2017 - remember that time? everyone was making money including thinking it was the end to all our money problems
You know the textbook description of the B wave (Bull trap)?
Narrow emotional advance, technically weak (just 3 waves), selective. Results in non-confirmations. Aggressive euphoria an denial
Other assets for similarities?
Looking at Silver chart, its also an extended 5th wave (0.618 divides at 4th wave) where the correction dropped till 50% (0.5 Fib)
Most (all?) EW analysts are unable to see that 5 waves are done, the simple count of 5 waves should be obvious instead of trying to fit your bullish bias. This is the reason the 2019 rally is expected to be the beginning of new 5-wave bull cycle, this will be proved wrong ONLY if we make a lower low
I believe EW analysts who run paid group are unknowingly (or knowingly) biased towards a bullish count for 2019 rally. Because otherwise, my chart means the market is going to die (almost) and so will their businesses. I've seen how this clouds their judgement.
But if you see charts of DASH or ETC, we already made a lower low recently which busts the myth that the early 2019 Alt coin rally was impulsive.
Here is why I think this is a perfect textbook style 1st cycle of 5 waves
- 1. We can see clear 5 waves (in green)
2. Wave 2 is deep (0.618), wave 4 is shallow/sideways to almost 0.382
3. The entire structure is divided at 0.618 near wave 4 bottom, which indicates again this is an extended 5th
After every 5 wave bull cycle, there is a deeper ABC correction that goes up to 50% retracement or 0.618. Extended 5th wave cycles also correct sharp & deep, the textbook guideline says till wave2 (here blue) of the 5th wave (green)
Here is the confluence for $15 correctionn
- 1. Major assumption: 5 wave are done, so next ABC correction is always deep
2. Correction is 3 waves (ABC)
3. A textbook ABC correction is length of A:C = 1:1 (target area)
4. ABC corrections are usually confined within a channel, the current C wave will likely end at the bottom of the channel
5. The same target area, $15 also happens to be subwave2 (blue) of the 5th wave (green)
6. $15 is 0.5 Fib of the entire cycle, so 50% retracement
7. Entire drop to $75 was less the 0.382Fib of the bull run (2015-2017), which is too shallow after a 5 wave bull cycle
An optimistic target can be $50 which 0.618 of (A), see blue line in below chart. It is also 0.382 Fib of the entire rally from 2015 - 2017. This target could be achieved by June 2020
RSI evidence
RSI on the weekly appears to be in a downward channel and keeps getting rejected at the channel, recently in 2019 runup, it made a double top and dropped below. I consider RSI below 50 bearish, and after a 2nd attempt to breakthrough it failed again (red arrows)
2019 Rally was the perfect Bull Trap
As per my major assumption we are in an ABC correction, where A downtrend was completed by Dec 2018 ($75), and the subsequent rally was actually the B wave ($360)
Unlike an impulsive wave, a B wave is a corrective wave which has 3 subwaves and usually confined within a channel
Reasons to think its a B wave
- 1. Entire price is within the blue channel
2. It looks like a 3 wave structure, similar to the red ABC
3. Red C was 1.618 Fib ext of Red A, also green C was 1.618 Fib ext of green A
4. Red B rallied to 50% of A (0.5 Fib), the entire 2019 rally was to 50% (0.5 Fib) of the entire 2018 drop
Wave Psychology
Elliott Wave is based of human psychology of Greed and Fear. So the top of the 5th wave is extreme greed and bottom of C wave is fear. So the 5th wave (blue) of the 5th wave (green) is euphoria, this happens to be after Oct 2017 - remember that time? everyone was making money including thinking it was the end to all our money problems
You know the textbook description of the B wave (Bull trap)?
Narrow emotional advance, technically weak (just 3 waves), selective. Results in non-confirmations. Aggressive euphoria an denial
Other assets for similarities?
Looking at Silver chart, its also an extended 5th wave (0.618 divides at 4th wave) where the correction dropped till 50% (0.5 Fib)
Most (all?) EW analysts are unable to see that 5 waves are done, the simple count of 5 waves should be obvious instead of trying to fit your bullish bias. This is the reason the 2019 rally is expected to be the beginning of new 5-wave bull cycle, this will be proved wrong ONLY if we make a lower low
I believe EW analysts who run paid group are unknowingly (or knowingly) biased towards a bullish count for 2019 rally. Because otherwise, my chart means the market is going to die (almost) and so will their businesses. I've seen how this clouds their judgement.
But if you see charts of DASH or ETC, we already made a lower low recently which busts the myth that the early 2019 Alt coin rally was impulsive.
Note
Here is a bullish alternative as well. We have been in a steady downtrend for 5 months, we can expect a relief rally. But Macro remains unchanged for meTargets
1. Bluebox - relief rally to 0.618Fib (likely)
2. T1 - $360+
3. T2 - $680 (stretch)
Note
The Bull alternative turned out correct and we also hit the 0.618Fib level and dropped hard out of the channel. This further validates our overall bearish stanceNow the price is trying to get back into the channel above $130, we have to see if bulls are successful in doing so
Overall targets remain unchanged and expect this correction to go to double digits
Follow me for more updates
twitter.com/imkeshav
youtube.com/channel/UCskbBdZstBUQ_4y2o912zzw
twitter.com/imkeshav
youtube.com/channel/UCskbBdZstBUQ_4y2o912zzw
Related publications
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.