January 19, 2023: ETH-USD (Ethereum) Elliott Wave and Technical Analysis – Video and Charts
There is now evidence that the low may have occurred in November 2022. An alternate wave count in this analysis is used to indicate what would be required to discard the possibility that the bear market may continue.
Summary: The next bullish run for Ethereum is now expected to most likely have begun. A possible target for primary wave 3 may be 54,226. This target is conservative and may not be high enough. If the channel about the bear market is breached by upwards movement, then that would offer confidence in the main bullish Elliott wave count.
It remains possible that the bear market may continue to find further lows. A new high above 2,030.19 would invalidate this alternate wave count.
The data used for this analysis comes from CryptoCompare.
All charts are on a semi-log scale.
MAIN ELLIOTT WAVE COUNT
The monthly chart looks at the entire price history of Ethereum. The Elliott wave count begins at the low of October 2015.
From October 2015 to December 2017 this upwards wave subdivides perfectly as an Elliott wave impulse, labelled cycle wave I. The impulse lasted just over two years, which is within the expected duration for a cycle degree wave, so confidence that this degree of labelling is correct may be had.
Within cycle wave I, note that wave lengths noted on the chart are not Fibonacci ratios but guides to expected behaviour for Ethereum. Prior Ethereum price history exhibits very long third waves and fifth waves which are longer than third waves (with the exception of intermediate wave (5) within primary wave 1 within cycle wave III).
The depth of primary wave 2 and the deepest part of primary wave 4 within cycle wave I are also noted. Ethereum has had deep corrections, but not as deep as other cryptocurrencies, within cycle wave I.
Within cycle wave III, primary wave 2 may not move beyond the start of primary wave 1 below 82.05. If primary wave 2 within cycle wave III is over at the last low, then it would be 0.83 of primary wave 1. This is a normal to be expected depth.
Cycle wave III may only subdivide as an impulse. It must move far enough above the end of cycle wave I to allow room for cycle wave IV to unfold and remain above cycle wave I price territory.
MAIN WAVE COUNT
Ethereum sometimes exhibits Fibonacci ratios between its actionary waves. Within primary wave 1, the ratios are noted on the chart.
The structure of primary wave 1 may be complete. Primary wave 2 may be a complete double zigzag. Primary wave 3 within cycle wave III may be in its very early stages. This wave count is very bullish.
Within primary wave 3, intermediate wave (1) may be incomplete.
When intermediate wave (1) may be complete in a few more weeks, then intermediate wave (2) should unfold as a deep correction lasting a few weeks. Intermediate wave (2) may not move beyond the start of intermediate wave (1) below 896.109.
*How to read the notations: For example, for minor wave 3 within intermediate wave (3) the notation “3 = 57.97 > 4.236 X 1” is read as minor wave 3 was 57.97 longer than 4.236 the length of minor wave 1.
Within the early stages of intermediate wave (1): Minor waves 1 and 2 may be complete and minor wave 3 is showing an increase in momentum and has support from volume. The curved J shape of minuette wave (iii) looks like a typical impulse within a bull market and does not look very much like a bounce within an ongoing bear market.
Minor wave 3 may only subdivide as an impulse. Within the impulse, minute wave iv may not move into minute wave i price territory below 1,350.33.
If the channel containing the bear market is breached by a full daily candlestick of upwards movement, then that would provide reasonable confidence in this wave count.
ALTERNATE WAVE COUNT
It is also possible that primary wave 2 may be an incomplete double zigzag.
The first zigzag in the double may be complete and is labelled intermediate wave (W). The double is joined by a three in the opposite direction labelled intermediate wave (X). The second zigzag in the double may be incomplete and is labelled intermediate wave (Y).
Within intermediate wave (Y), minor wave A may be complete and minor wave B may be an incomplete expanded flat. Minor wave B may not move beyond the start of minor wave A above 2,030.19.
Within intermediate wave (Y): Minor wave A subdivides as an impulse and minor wave B may be an incomplete expanded flat.
Within the expanded flat, minute wave b is a 1.27 length of minute wave a. This is within the most common length for B waves within flats from 1 to 1.38 the length of wave A.
Minute wave c would be extremely likely to make a new high above the end of minute wave a at 1,671.48 to avoid a truncation and a very rare running flat.
Minor wave B may not move beyond the start of minor wave A above 2,030.19.
RSI reached oversold on the weekly chart at the low in June 2022. This has only happened once before, in December 2018, which was a sustainable low.
Support at 1,070 has held and price is now moving higher towards resistance about 1,700. There is currently no clear trend. It would be reasonable to expect an upwards swing to continue until Stochastics reaches overbought and price reaches resistance.
There is now an upwards trend at this time frame. The trend is extreme, but this market can see ADX reach above 60, so it may yet become more extreme before it is in danger of ending.
RSI is overbought, but this may reach deeply overbought multiple times during strong bullish runs for this market. RSI reached deeply overbought early in cycle wave I in 2016 when Ethereum was below $5, and yet the bullish run continued to the end of cycle wave I many years later over $1,400. The high in January 2018 was associated with long term bearish divergence between price and RSI.
Published @ 06:37 p.m. ET.
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