Elliot Theory - Why I'm BULLISH on ETH
Updated
Hi Traders, Investors and Speculators of Charts📈📉
Ethereum has recently started a new bullish cycle along with the rest of the markets.
When we take a look at ETH from an Elliot Wave Theory analysis, we see that we are currently trading in the 12345 upwards Wave cycle.
ETHUSDT is currently trading in Wave 2-3, generally know as the longest/biggest wave of all the waves during the upward price action phase.
Elliott Wave theory begins by identifying two different types of waves:
1) Impulsive waves : Move in the same direction as the overall trend, 12345
2) Corrective waves : On the contrary, move against the overall trend. ABC
Elliot Wave strategy needs to follow and abide by some strict rules in order to validate the 5 wave move. The three basic rules are :
📢Wave 2 never retraces more than 100% of Wave 1. Typically, the retracement is between 50% and 61.8% of wave 1.
📢Wave 4 never retraces more than 100% of wave 3. Typically, declines between 38.2% and 50% of wave 3.
📢Wave 3 always travels beyond the end of wave 1 and it’s never the shortest one; Wave 3 will normally extend 161.8% x wave 1 (Currently, this puts us roughly at $4800)
❗ as above, A is close to Wave 4
There are also cycles within cycles. Think of it as a broccoli stem, where each flower head is composed up of many tiny smaller flower heads:
Impulsive waves and corrective waves are perfect opposites. The most important thing is to observe the Macro trend before using Elliot Waves in other words, is the price in a bullish cycle or bearish cycle? Here are the basic steps to follow when trading with Elliott Waves:
Step 1: Learn the Theory
The first step is to familiarize yourself with the Elliott Wave Theory, which is based on the idea that financial markets move in predictable patterns. The theory suggests that market prices move in waves, with each wave representing a specific part of the overall trend. The theory identifies two types of waves: impulsive and corrective.
An impulsive wave consists of five smaller waves, which move in the direction of the trend. A corrective wave, on the other hand, consists of three smaller waves, which move against the trend. Understanding the basics of Elliott Wave theory is crucial to trading with Elliott Waves.
Step 2: Identify the Trend
The next step is to identify the trend in the market you want to trade. This can be done by analyzing the price action on the chart. To identify the trend, look for a series of higher highs and higher lows for an uptrend, or lower lows and lower highs for a downtrend.
Step 3: Look for Wave Patterns
Once you've identified the trend, you need to look for wave patterns within the trend. An impulsive wave is made up of five smaller waves, and a corrective wave is made up of three smaller waves. These waves can be identified by analyzing the price action on the chart.
Step 4: Use Indicators to Confirm the Wave Patterns
While identifying wave patterns on the chart is important, it's also a good idea to use indicators to confirm the patterns. Some of my favorites include the Relative Strength Index (RSI) , Moving Averages (MA) and CryptoCheck START v3.
Step 5: Enter and Exit Trades
Once you've identified the trend and wave patterns, and confirmed them with indicators, you can enter a trade. You can use the wave patterns to identify potential entry and exit points. For example, you may want to enter a long position at the start of an impulsive wave and exit when the corrective wave begins.
Step 6: Manage Risk
💭 Finally, it's important to manage risk when trading with Elliott Waves. This can be done by placing stop-loss orders to limit losses if the trade goes against you. It's also a good idea to use proper position sizing to ensure that you're not risking more than you can afford to lose. On the chart I have wave 4-5 hanging in the air atm, let's get to wave 3 first and then we can re-asses where 4-5 may be. Important to note that it is a longer term trading plan.
_______________________
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We thank you for your support !
CryptoCheck
ETHUSDT ETHUSD ETHUSDT ETHUSD ETHUSDT ETHUSD ETHUSDT ETHUSDT ETHUSD
Ethereum has recently started a new bullish cycle along with the rest of the markets.
When we take a look at ETH from an Elliot Wave Theory analysis, we see that we are currently trading in the 12345 upwards Wave cycle.
ETHUSDT is currently trading in Wave 2-3, generally know as the longest/biggest wave of all the waves during the upward price action phase.
Elliott Wave theory begins by identifying two different types of waves:
1) Impulsive waves : Move in the same direction as the overall trend, 12345
2) Corrective waves : On the contrary, move against the overall trend. ABC
Elliot Wave strategy needs to follow and abide by some strict rules in order to validate the 5 wave move. The three basic rules are :
📢Wave 2 never retraces more than 100% of Wave 1. Typically, the retracement is between 50% and 61.8% of wave 1.
📢Wave 4 never retraces more than 100% of wave 3. Typically, declines between 38.2% and 50% of wave 3.
📢Wave 3 always travels beyond the end of wave 1 and it’s never the shortest one; Wave 3 will normally extend 161.8% x wave 1 (Currently, this puts us roughly at $4800)
❗ as above, A is close to Wave 4
There are also cycles within cycles. Think of it as a broccoli stem, where each flower head is composed up of many tiny smaller flower heads:
Impulsive waves and corrective waves are perfect opposites. The most important thing is to observe the Macro trend before using Elliot Waves in other words, is the price in a bullish cycle or bearish cycle? Here are the basic steps to follow when trading with Elliott Waves:
Step 1: Learn the Theory
The first step is to familiarize yourself with the Elliott Wave Theory, which is based on the idea that financial markets move in predictable patterns. The theory suggests that market prices move in waves, with each wave representing a specific part of the overall trend. The theory identifies two types of waves: impulsive and corrective.
An impulsive wave consists of five smaller waves, which move in the direction of the trend. A corrective wave, on the other hand, consists of three smaller waves, which move against the trend. Understanding the basics of Elliott Wave theory is crucial to trading with Elliott Waves.
Step 2: Identify the Trend
The next step is to identify the trend in the market you want to trade. This can be done by analyzing the price action on the chart. To identify the trend, look for a series of higher highs and higher lows for an uptrend, or lower lows and lower highs for a downtrend.
Step 3: Look for Wave Patterns
Once you've identified the trend, you need to look for wave patterns within the trend. An impulsive wave is made up of five smaller waves, and a corrective wave is made up of three smaller waves. These waves can be identified by analyzing the price action on the chart.
Step 4: Use Indicators to Confirm the Wave Patterns
While identifying wave patterns on the chart is important, it's also a good idea to use indicators to confirm the patterns. Some of my favorites include the Relative Strength Index (RSI) , Moving Averages (MA) and CryptoCheck START v3.
Step 5: Enter and Exit Trades
Once you've identified the trend and wave patterns, and confirmed them with indicators, you can enter a trade. You can use the wave patterns to identify potential entry and exit points. For example, you may want to enter a long position at the start of an impulsive wave and exit when the corrective wave begins.
Step 6: Manage Risk
💭 Finally, it's important to manage risk when trading with Elliott Waves. This can be done by placing stop-loss orders to limit losses if the trade goes against you. It's also a good idea to use proper position sizing to ensure that you're not risking more than you can afford to lose. On the chart I have wave 4-5 hanging in the air atm, let's get to wave 3 first and then we can re-asses where 4-5 may be. Important to note that it is a longer term trading plan.
_______________________
📢Follow us here on TradingView for daily updates and trade ideas on crypto , stocks and commodities 💎Hit like & Follow 👍
We thank you for your support !
CryptoCheck
ETHUSDT ETHUSD ETHUSDT ETHUSD ETHUSDT ETHUSD ETHUSDT ETHUSDT ETHUSD Note
ETH still looking extremely bullish:Note
ETH technicals looks like it's ready to go higher up towards $2100Note
ETH sideways as BTC takes the shine from here ✅Note
ETH increases when BTC takes a breather:Note
Perfect bounce from the basis of the Bollinger bands, but the price could still wick to the lower pink/white bbands:Note
Expecting an ETH bounce soon for two reasons:- Price usually drops less than 10%, we're already on -11% correction
- EMA seems to be turning around (technical indicator, green line)
Note
Reaching lower pink/ lower white Bollinger Band is still possible:
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