$ETH closed the week as if something is about to happen. And this is not a rally as the bearish odds are overwhelming on the daily/weekly/monthly frames.
Let’s explore the hypothesis from various angles.
The High-Wave Doji in May was neither confirmed not rejected by the June candle. However, the first step towards confirming a multi-month decline was completed.
So far, the price is holding above the 8 EMA line, but the RSI and MACD are not in the position to support it further. Something has to give.
– If ETH in July closes below $1707, the prolonged decline would be set.
– A closure above $2908 would likely mean a rally is underway.
– Anything in between, a continued horizontal correction (Alt IV in light blue on the long term chart below). This path has the highest odds for now.
Two weeks ago, the Three Black Crows formation set the bearish odds. The odds remain in force – the last weekly candle was rejected from above 20 EMA to below 8 EMA in one daily shot and ended the week like that. Makes you think.
The other indicators are not yet supportive of a rally. Until a weekly candle closes above $2250 or higher, it is tough to think bullish.
Odds: Strong Bearish
The Tower Top combo completed on Thursday was a strong bearish message. The following three small candles at the bottom of the Tower Top are a classical 3-day pause before resuming the drop (sometimes it takes more than 3 days).
From that perspective a big move down could happen as early as overnight.
The volume and other indicators are very supportive of the next move down.
Odds: Strong Bearish
Long Term Chart
From the long term perspective, the Elliott Wave weekly chart remains the same since May 16. I have doubts that wave IV (dark blue) has completed and think that it is likely to extend for 2-6 months (alt IV).
If ETH breaks below 1423.20, there would be a chance of decline to the triple-digit price area in the nearest future. The odds are still slim, but be aware.
Short Term Chart:
I can see the two most probable mid-term bearish paths for ETH. A straight decline with breaking of the Long Term support (blue) and a prolonged, multi-month see-saw that would not cross the LT support.
FORECAST & Events to Watch:
A downwards move is expected in the next few days. The move could break through the 200 MA line. Based on the minor waves, the most immediate target for the move would be $1700-1705.
There is a very slim chance of a rally. If it happens, I’ll address this in my daily analysis.
– If ETH in July closes below $1707, the prolonged decline would be confirmed.
– A closure above $2908 would likely mean that a rally is underway.
– Anything in between, a continued horizontal correction (Alt IV in light blue on the long term chart above). This path has the highest odds for now.
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The call on May 16: