$ETH seems to be topping the first large wave off the bottom and would require a pause before advancing further. Let’s evaluate the options on the different time frames.
The July’s candle shifted the odds back to the bulls. A Piercing Line / Hanging Man type of candle is a very good outcome after the terribly bearish interim candle in the middle of July. These types of candles require confirmation.
If August closes above $2890, a continued rally would be confirmed. Anything below would be viewed as bearish.
The price is back above 8 EMA. While $ETH is overbought on the monthly, it looks like it has some room to go higher.
The weekly candle formed a healthy bullish continuation candle. It confirmed the Engulfing of the previous week and closed well above 8 and 20 EMA lines, saving them from a bearish cross.
Volume, RSI and other indicators support further advance.
As forecasted, $ETH formed 10 green candles. From the candle theory perspective, this is positively bearish. While there is a possibility to paint 1-2 more green candles, this would be viewed as an overstretch and would signal an even faster/deeper pullback.
Some indicators show an imminent reversal that could happen later today or tomorrow.
As marked on the 4hr chart above, the top of wave (1) is likely in. There is a little chance of another spike, but no higher than $2700.
Following the limitations set by monthly and weekly candles, I am expecting a pullback to the dark blue rectangle area – $2200-2350. However, a shallow retrace to $2450 would not be a surprise.
While a deep retrace to ~$1900 is possible under the EW guidelines, I view this possibility as very unlikely as this point.
Possible duration of the pullback – 5-10 days.
Long Term Chart
From the long term perspective, the Elliott Wave weekly chart remains the same since May 16. There is a possibility that wave IV indeed completed and wave V started.
Judging by the character of the ongoing wave 1 of V, wave V could be exceptionally aggressive and might complete within a month or two. However, to confirm this hypothesis I need to see at least one sizeable pullback, its size and timing.
Based on some very preliminary estimates, wave V could advance at least to $4570 +/- 100. I will keep updating this estimate as more waves are formed.
Alt Count – Red
There is still a possibility of an extended wave IV for another six months or so. With such a strong ongoing rally, I evaluate the odds of such scenario as low.
FORECAST & Events to Watch:
- Expect a pullback to $2200-2350 area in the next 5-10 days.
- The pullback would be followed by a strong wave (3) that could end within a few days.
Possible target for wave (3) – $3600-3800.
- There is a possibility for wave V to complete in one month. Target – $4570 +/-100.
- If the next week closes below $2108, this would be very bearish and would change most of the expectations.
- August 31 closure with a red candle would likely signal a prolonged correction for several months.
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