Solana (SOL): Correcting Before Moving Higher Again

Solana (SOL) has rallied from just over one dollar at the December 2019 low to $216 last week. A 21,500% return in less than two years, which has caught everyone’s attention. It thus deserves its updates from now on. Here I present my Elliott Wave Principle (EWP) count and Technical Analyses (TA) work. The two combined are one of the most reliable and accurate -but not infallible- methods to understand past price action, helping my premium crypto trading members better anticipate future price action. With SOL having topped at $216 last week and now trading at $158, many will ask, “is the top in?“. My answer is, “Yes, A top is in, but it is not THE top.” Allow me to explain below.

Figure 1. SOL weekly & daily chart with EWP count and technical indicators.

After wave three come waves 4 and 5

From the EWP, we know with certainty that an impulse pattern comprises five waves: 1, 2, 3, 4, 5. Thus after wave-3 comes wave-4 and wave-5. Figure 1A above shows, using weekly candles, that IMHO Solana has topped for (black) major-3 of (blue) primary-III and is now in major wave-4. Price has almost already retraced 38.20% of the rally that started mid-June this year. A typical 4th wave target.

Figure 1B shows the daily chart-based EWP supports that using the weekly candles. In addition, I added the Ichimoku cloud, and as you can see, when Price is above the cloud, “good things happen after a pullback, whereas below the cloud, weakness persists. Note (black) major wave-2 lasted from May to mid-June and retraced almost precisely 62% of wave-1: textbook. Thus, given 4th waves are often complex price structures, comprised of at least three waves (a,b,c,), I expect a bottom soon at around the rising 20-day Simple Moving Average ($145ish) for red wave-a, then a “dead cat bounce” for red wave-b, and then last wave-c back down to the $140 zone.

To illustrate the 4th wave complexity, please see Figure 2 below. It shows the February-March correction of an intermediate degree, one degree lower than the current correction. It lasted a month and consisted of four dips and three rallies. But the overall pattern was more of sideways congestion, e.g., called a “Bull flag.” Besides, the correction retraced precisely 38.20% of wave-iii and stayed above the Ichimoku cloud at all times. Once wave-iv was completed, wave-v took over, and SOL rallied strongly. Hence, since we are now dealing with a major-4 type correction, I expect the same pattern to emerge over the next few weeks.

Figure 2. SOL daily chart with a 4th wave EWP count and technical indicators.

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Bottom line: Solana (SOL) completed IMHO a more significant 3rd wave and is now in a 4th wave correction, followed by a final 5th wave to new all-time highs. But for now, the focus is on this 4th wave as it will likely be a long-drawn, sideways movement with numerous, hard to precisely foresee, rips and dips that can quickly burn most seasoned traders’ accounts. Hence, the focus should be on the intermediate term. As I told my premium crypto trading members already, “SOL is now most likely in wave-4 of wave-III to ideally around $130-140, from where wave-5 to new ATHs will eventually take hold.

For a look at all of today’s economic events, check out our economic calendar.

SP500 Update: Rally since September 2020 Low Complete. Low-4000s Next?

It has been over two months since I last provided my Elliott Wave Principle (EWP)-based insights on the S&P500 (SPX); see here and here, Thus an update is certainly due. The index topped at SPX 4546 on Sept. 2. It has since moved lower every trading day. The last string of five down days ended Feb. 22. Thus, the current down week, therefore, appears to signals a trend change. Allow me to explain below.

Figure 1. S&P500 daily chart with detailed EWP count and technical indicators

A break below the mid-August low is needed to confirm the more significant correction.

Since the early May low, the SPX has been in an overlapping set of regular interval rallies, lasting about 20 TDs with 3-day corrections, all bottoming around the 18th of each month. Each low and high was a higher low and a higher high: a Bullish pattern. Hence, because the most recent string of down days is already five, a drop below the August low at SPX4368 (orange wave-4 at the green arrow) will confirm a (red) intermediate wave-iv to ideally SPX4030-4235 is underway. I prefer the upper end of the target zone because, in Bull markets, the downside often disappoints, and the upside surprises.

The beauty of the EWP is that we know with certainty in an impulse, the 3rd wave is followed by a 4th wave correction and then another 5th wave. Besides, the 3rd wave is made up of five smaller waves. In this case (black), major-3 comprises five (red) intermediate waves: i, ii, iii, iv, and v. Most likely intermediate wave-iii of major-3 has topped. Thus wave-iv is logically most likely underway, which means wave-v of major-3 is still pending. I expect wave-v of wave-3 to complete around SPX4800-5000.

Figure 1 above also contains many technical indicators (RSI, MACD, MFI) which exhibit negative divergence (red dotted arrows) to support the preferred EWP count. Although divergence is only divergence until it is not, it must be noted, and it will take a break above SPX4545 to erase the current setup and target SPX4600-4650.

Please note 4th waves are often quite tricky with lots of twists and turns (they can become any of 7 types of different flats or endless triangles). I, therefore, view the pending correction as more of a buying opportunity than a chance to short the index. For now, let us see if the August low can get broken to the downside over the coming days, and then I will be able to narrow down the target zone for wave-iv of wave-3 even better.

Figure 2. S&P500 hourly chart with detailed EWP count and technical indicators

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Lastly, the hourly chart above shows the index can have completed already five (green) waves up off the March low following an almost picture perfect Fibonacci-based EWP pattern, with wave-3 to the 1.382x wave-1 extension, wave-4 back to the 0.764x Fib-extension, and now wave-5 only 0.28% off the mark. When five waves are complete, always expect -at a minimum- three waves in the opposite direction. Thus, caution to the long side is advisable for swing- and short-term traders. Longer-term, this Bull has, IMHO still plenty of upside potential. It will require a break below the recent March SPX3723 low to tell us a multi-year correction is at hand.

 

Cardano (ADA): The Expected Pullback Came. Rally Time?

A week and a half ago, see here, I preferred for Cardano (ADA) “… wave-b is now underway, which can target as high as $2.97-3.17 for what would then become an “irregular flat,” before (green) wave-c of (red) wave-iv brings the price back down to the ideal target zone of $2.50-2.20 once again.” Bingo. In the meantime, I had told my premium crypto trading members that a break below $2.70 would be bearish. Thus, using the Elliott Wave Principle (EWP) combined with Technical Analyses (TA), my preferred view was the correct one, and now I can look at the new pieces of the never-ending puzzle.

Figure 1. ETH daily chart with EWP count and technical indicators.

The break below $2.20 created another option

My preferred view of a larger, more complex, i.e., irregular flat 4th wave, remains, but with the drop to $2.04, I must acknowledge the possibility of another option. See Figure 1 above. I’ll get to that in a minute. As long as this week’s low holds, ADA can build on its (red) 5th wave to ideally $3.50 +/- 0.25. See Figure 1A. Namely, so far, ADA has, over the last two days, closed daily inside the ideal (red) wave-iv target zone ($2.22-2.51), at $2.51 and $2.47, respectively, and is now trying to move back above it. Closing prices are most important and thus, so far so good.

The 2nd option, shown in Figure 1B, is based on where the new uptrend started. The preferred case has the June low because the July low was a higher high (red wave-i, ii), but it is the July low in the new alternate case. The new possibility suggests the recent rally was only a 1st wave (Red wave-i in figure 1B), and Cardano is now working on (red) intermediate wave-ii. With Tuesday’s low, it follows that ADA had already retraced almost enough to get to the ideal wave-ii target zone ($2.04 vs. $1.99). Thus this option has merit and must be considered going forward. It does mean, bigger picture-wise, the 3rd wave to ideally $5.00-5.25 should soon start.

Bottom line

Given Cardano (ADA) has essentially done as forecasted over the last 2-3 weeks. My preferred POV remains it completed its 3rd and possibly also its 4th wave and should embark on a 5th wave to ideally the mid-$3s soon as long as this week’s low at $2.04 holds. If it does not, then -given that this week’s low was a bit lower than expected ($2.04 vs. $2.22, albeit still within the 10% error range)- it does open up the possibility that ADA is in a 1st and 2nd wave setup instead, with a 3rd wave to the $5s to commence. Regardless, both options do look for higher prices ultimately. As always, all we can do is “anticipate, monitor, and adjust.”, and as such, I constantly monitor for potential new options in this never-ending puzzle.

Bitcoin Bulls: Pay Me Now or Pay Me Later

It has been a few weeks since I last wrote an update on Bitcoin (BTC), but the price action since then (August 11, see here) has been a bit tricky to interpret. That is fine as markets, including cryptocurrencies like BTC, move from “clear” to “less clear” and back to “clear” constantly. In other terms, nobody has all the correct answers all the time.

Back then, BTC was trading at $46500s and has hovered below the critical $50K level ever since as it is now trading at $49500s. That’s 6% higher, and my initial assessment of a wave-1 top back then was wrong. With three weeks of additional data available, a clearer picture emerges: either the anticipated 2nd wave was delayed and is still happening soon. Or BTC will not look back and rally quickly to $60K first as a pitstop to $90K+. See Figure 1 below. Allow me to explain.

Figure 1. Bitcoin daily charts with detailed EWP count and technical indicators.

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A breakout targets $60K, while a breakdown targets $42K

Over the last three weeks, the price action has placed Bitcoin in a “pay me now or pay me later” position. Either it is setting up as a -in Elliott Wave Principle (EWP) terms- nested one-two setup (Figure 1A) or it is topping out (Figure 1B). The difference between the two options is simple: breakout above the mid-August high ($50514, labeled as either (grey) minute wave-i in Figure 1A) and then wave-iii of (green) 3 of (red) iii, etc. is underway targeting $60K.

Contrarily, a breakdown below the recent lows at around $46245 (about equal to the 200-day simple moving average), with full confirmation below $43840, means (green) wave-c down to $40-44K is underway to complete (red) wave-ii. From there, BTC can then start its rally to $90K. Thus, thanks to the EWP, we now have straightforward if/then scenarios with associated price levels to know which of the two it will be. Trading does, IMHO, not get much simpler than that.

Bottom line: BTC decided it was not ready to roll over yet three weeks ago and tagged on a few more waves that have now allowed it to set up for either a direct breakout above $50514 to $90K+ with an initial pitstop at around $60K. Or it will break down below the late- and mid-August lows to target $42K+/-2K first before setting up for a rally to $90K+. We should know soon enough, and my premium crypto trading members, as well as those who subscribe to my automated crypto trading alerts, are ready either way.

For a look at all of today’s economic events, check out our economic calendar.

Cardano (ADA): Expect a Pullback and Another Rally Soon

Last week, in my first update on Cardano (ADA), I was looking for the cryptocurrency to top out soon and fall back “to ideally $2.25-2.55 before the next rally to ideally $3.25-3.75. From there, I then expect an even more significant correction”. Fast forward, and ADA topped that same day and reached $2.47 and $2.50 three and four days later, respectively, and rallied back to the $2.95. Thus, the Elliott Wave Principle (EWP) combined with Technical Analyses (TA) was indeed a reliable and accurate method to forecast the recent highs and lows. The question now is, if the correction is already over?

Figure 1. ETH daily chart with EWP count and technical indicators.

Fourth waves are often very complex

Last week I showed that “thanks to the EWP, we know with certainty that after wave 3 comes a 4th and 5th wave.” In this case (red) intermediate waves-iii, iv, and v. See Figure 1 above. Last week’s drop to the 23.60% retrace of wave-iii is technically enough for a 4th wave correction. Corrections always comprise of at least three waves (a, b, c), and 4th wave corrections often become -in EWP-terms- flat corrections, triangles, or any combination thereof. See here.

Thus the question is if last week’s $2.47 low was all off (red) wave-iv or only (green) wave-a of wave-iv? See Figure 1 above. At his stage, I cannot tell with certainty which of the two options it is but based on the EWP knowledge that 4th wave corrections are often rather complex and longer-lasting, I prefer the latter option. In that case, wave-b is now underway, which can target as high as $2.97-3.17 for what would then become an “irregular flat,” before (green) wave-c of (red) wave-iv brings the price back down to the ideal target zone of $2.50-2.20 once again.

Alternatively, ADA will have to rally above $3.17 to tell me wave-iv is complete because, above that price level, the b-wave of an irregular flat would be too long, according to the EWP guidelines. In that case, I will look for ADA to possibly reach as high as $4.50+/-0.25. But it will mean last week’s $2.47 low will have to hold going forward, or else the “dreaded” and favored continued 4th wave is in play.

Bottom line: Cardano (ADA) completed IMHO its “more significant 3rd wave and embark[ed] on a correction to ideally around $2.25-2.55, depending on where the 3rd wave will top.” as anticipated last week. The correction already reached the ideal target zone, which was -as said last week- “IMHO another buying opportunity for swing traders as long as ADA does not break below $1.87.” The cryptocurrency would likely want to revisit this zone once again for a more complex correction, but a break out above $3.17 will mean it can target $4.50+/-0.25 because “after three comes four and five, that we know for certain.”

For a look at all of today’s economic events, check out our economic calendar.

 

Cardano (ADA): Expect a Pullback and Another Rally Soon

Cardano (ADA) has now become the 3rd largest cryptocurrency by market cap. See here. Besides, I already started covering it daily for my Premium Crypto Trading Members last week, and thus there are enough reasons to now share my work with the world. For those of you unfamiliar with my work on Bitcoin (BTC) and Ethereum (ETH), I use primarily the Elliott Wave Principle (EWP) and Technical Analyses (TA) to reliably (~70%) and accurately (+/- 10%) forecast how high and low a specific move, depending time-frame, should go. Last week on August 17, see Figure 1A below, I showed my Crypto Trading members, who are banking heavily on my calls, ADA should bottom at around $1.89 and then rally to $2.5-2.75. It reached $1.87 the next day and is now trading at $2.92. That is the power of EWP and TA combined. So what’s next for ADA?

Figure 1. ETH daily chart with EWP count and technical indicators.

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After three comes four and five, that we know for certain

Thanks to the EWP, we know with certainty that after wave 3 comes a 4th and 5th wave. Just like (green), minor wave-4 and five came after minor-3 last week. See Figure 1B above. Currently, ADA is IMHO completing (Red) intermediate wave-iii of (black) major wave-5. This minor wave-5 divides (grey, minute, waves i, ii, iii, iv and v) and extends. Hence, it has already surpassed my ideal target zone ($2.50+/-0.25), but it is still within the accuracy 10% range. Clearly, and as usual, “in Bull markets, upside surprises and downside disappoints.”

At this stage, albeit not yet confirmed, the technical indicators, like the RSI5 and MFI14, are less potent now than they were at last week’s top. This setup is typical for a wave-5 of wave-iii, as the maximum strength readings are often at the 3rd of a 3rd wave high. I, therefore, expect ADA to top out soon and embark on a wave-iv correction, lasting several days, to ideally $2.25-2.55 before wave-v of wave-5 takes hold and rallies price to ideally $3.25-3.75. From there, we should then expect an even more significant correction. But, for now, let us focus on the pending (red) wave-iv and -v.

Bottom line: Cardano is now the 3rd largest cryptocurrency by market cap and has rightfully earned its separate coverage. ADA should be completing a more significant 3rd wave soon and embark on a correction to ideally around $2.25-2.55, depending on where the 3rd wave will top. After, it will most likely rally to new all-time highs again, thinking mid- to high-$3s. Hence, the pending correction should IMHO be another buying opportunity for swing traders as long as ADA does not break below $1.87.

For a look at all of today’s economic events, check out our economic calendar.

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Ethereum: We Got the “Pullback, Rally,” Expect a More Significant Pullback Soon

Last week, see here, I was looking for a smaller degree 4th wave pullback, then a 5th wave rally to complete a larger 1st wave top. Ethereum, aka Ether (ETH), took a slight detour by first rallying to the ideal 161.80% extension for a b-wave and then dropped into this week’s low for what is most likely the c-wave of wave-iv and wave-v (the “Rally”) to ideally $3415-3585 should now be underway. See Figure 1 below.

Figure 1. ETH daily chart with EWP count and technical indicators.

The pullback came and went, now in the rally to complete wave-1

Elliott Wave Principle (EWP) fourth waves are inherently difficult to forecast, track, and trade, and the last few days showed once again this is the case. Namely, what we got was most likely an irregular flat 4th wave, where the (green) b-wave topped above the end of the 3rd wave (red wave-iii). Since corrections, and flat waves, in particular, are always made up of at least three waves (a, b,c), we know that “after wave-b, comes wave-c” and in this case (green) wave-c of (Red) wave-iv bottomed on Wednesday.

Albeit not shown, 4th waves typically retrace between 23.60 and 38.20% of the prior 3rd wave, which would be the $2935-2785 zone. ETH bottomed at $2952 on Wednesday, off by 0.58% and thus close enough (well within the margins of error!). Therefore, as long as this low holds, we should expect ETH to reach the ideal wave-v of the wave-1 target zone of $3415-3585. From there, a multi-week correction, wave-2, should unfold. See Figure 1 above. It can target anywhere between $2145-2865 depending on how deep or shallow this wave-2 will become. It is impossible to know beforehand.

However, typically 2nd waves retrace about 50-62% of the entire prior 1st wave, so I anticipate for now -without having any data at hand yet to confirm a bottom in the $2380-2590 zone (orange rectangle). Once more price data becomes available, I can fine-tune this pending and anticipated low. Remember, all we can do is “anticipate, monitor, and adjust”. But few methods, if any, can already make such forecasts as the EWP can. For now, ETH has topped and bottomed where it should for a smaller 3rd and a 4th wave, so there’s nothing yet to suggest the minor 5th wave and more significant 2nd wave will not unfold as anticipated.

Last but not least, please note how price reached the (blue arrow) symmetry breakout target to the T. When classic Technical Analysis and the EWP align, price forecast can be very accurate and reliable. Now “the traffic light” is also back to full green, so I expect higher prices over the next few days.

Bottom line: The devil is always in the details, and one can therefore not foresee every move. The anticipated “pullback” became a bit more complex, but ETH is overall tracking along with the preferred EWP impulse pattern well. As such, my premium crypto trading members knew exactly where to expect the pullback bottom and subsequent rally. Thus, as long as this low holds, we should expect ETH to reach the ideal wave-v of the wave-1 target zone of $3415-3585. From there, I still anticipate a correction back to the mid-$2000s before the rally to new All-time highs should kick in.

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Ethereum: Pullback, Rally, More Significant Pullback, and Then to $9000?

Last week, see here, I found for Ethereum (ETH), aka Ether, “using the Elliott Wave Principle (EWP), I prefer to apply a bullish EWP count. Ideally, ETH bottomed for (blue) Primary wave-IV on July 20th, possibly already June 22nd, and should now be working on a few more minor 4th and 5th waves (green 5, red iii, iv) to complete a more extensive (black) major-1 wave of (blue) Primary-V. This wave-1 should ideally reach around $3000-3300, which aligns well with the triangle breakout target (blue arrows), followed by a wave-2 back to around $2500+/-100. A breakout back above the wave-1 high from those lower levels will then tell me wave-3 is underway. Ultimately, Primary-V should ideally target ~$9K.”

Yesterday, ETH topped at $3274 right in the initial wave-1 target zone of $3000-$3300. Bingo! An easy 15% gain if you’d longed ETH last week based on my insights. So what’s next?

Figure 1. ETH daily chart with EWP count and technical indicators.

Ideally, a pullback and a rally to complete wave-1

Last week I showed you “the traffic light.” It is all green, and ETH is in an uptrend: go! It helps me tell what the short- to long-term trends are and if I should wear a Bullish or Bearish hat. A green traffic light tells me that the odds of good things, i.e., higher prices, are higher than during a red traffic light. The traffic light was right. Now that more price data has become available, I can fine-tune my EWP analysis, and based on the Fibonacci-extension for the current EWP count, as well as the technical indicators, and it appears ETH topped for (red) intermediate wave-iii of (black) major wave-1. Note that in an impulse, the 1st wave is made up of five smaller waves—the red waves in this case.

Thus, we know that after three (iii) comes four (iv), which should ideally fall back to the 100% Fibonacci-extension, possibly as low as the 76.40% extension. See Figure 1. That’s $2866-2697. From there, I then expect a last (red) wave-v to the ideal wave-1 target zone (176.40-200.00% Fib-extension: $3415-3585). However, if ETH does not stop at the 76.40% extension but continues to decline, I have to view wave-1 as already complete and wave-2 underway. In that case, wave-2 should bottom around $2000-2200.

Bottom line: Last week’s assessment for higher prices was correct, and the target zone has been reached. Now ETH should ideally see a short-term pullback and rally (each lasting several days) before seeing a multi-week pullback from where the next big run will start. But, if the Bulls cannot hold support at around $2700, the odds of this multi-week pullback already underway increase tremendously. Last but not least, please always remember market analysts are only human and make mistakes. See my Tweet here. It helps set the right expectations.

For a look at all of today’s economic events, check out our economic calendar.

Bitcoin’s Rally to $90K+ Back on Track

Last week, see here, I showed the Bullish Elliott Waves (EWP) option for Bitcoin (BTC), looking for a rally to initially mid-$40Ks (its 200-day simple moving average (SMA)) before a multi-week pullback should happen. In finer detail, I had placed a wave-iv of wave-1 label at around the August 3 low of $37718, expecting a wave-v of 1 higher to commence soon. Bitcoin bottomed a daily later at $37526 and is now trading at $46.5K. Thus, so far, so good.

Figure 1. Bitcoin daily chart with detailed EWP count and technical indicators.

A break below Monday’s low at $42818 is the Bulls’ first warning

Last week I found, “Because one can always find a bullish or bearish data point to support one’s biased view, it is the weight of the evidence approach that allows for a much more objective interpretation. In this case, it is rather apparent the weight of the evidence is predominantly bullish. All BTC now needs to do is reclaim its 200d SMA.” Thus, my objective analyses, which my premium crypto trading members bank on, pointed in the right direction, and Bitcoin has now reclaimed its 200d SMA.

Given that the daily chart is still Bullish

  • price is above all its SMAs and those are rising.
  • Note the four green arrows at the upper left corner of the chart. It’s called “the traffic light,” and it means “GO” when it is green.
  • And the currency is above its Ichimoku cloud as well,

A possible more Bullish alternative should be considered. Namely, the current red wave-v can subdivide higher to $58-59K. But, I find that option less likely because of the divergences on the technical indicators and overbought money flow. Thus, a break below the 200d SMA from current levels is a first warning sign for the bears that the (black) major-2 wave is likely underway. In contrast, a break below Monday’s low ($42818, red horizontal arrow) increases those odds even more as the cryptocurrency makes lower lows.

Bottom line: Last week, I found, “If BTC can hold above $35495 from now on (the red wave-i high made on June 24) and rallies towards its 200d SMA from around current levels, then the chart shows a perfect setup for five waves higher since the June 22 low. That would significantly increase the odds for a pullback, wave-2, before a solid rally to ideally new all-time highs; wave-3.” The cryptocurrency did just that and even gave us a little more upside. Thus my preferred POV remains BTC should see a decent pullback soon before rallying again. Alternatively, since upside surprises and downside disappoints in Bull markets, a continued $58-59K is not entirely unlikely. The Bears will now have to break $30K to target $20K.

For a look at all of today’s economic events, check out our economic calendar.

Ethereum: The Anticipated Rally to $9000 Took a Detour

A month ago, see here, Ethereum (ETH), aka Ether, had the potential setup in place to start its run to $9K. However, it failed at its 50-day simple moving average (SMA) and remained below its Ichimoku Cloud. History tells us when an instrument is unable to clear those hurdles; pressure remains down as the trend is down. Thus, ETH revisited the $1700 level one more time in July and, in addition to that, established a triple bottom. See figure 1 below.

It bottomed on July 20th at $1720 and staged a 17-day rally which brought it back above A) all its SMAs (including the 50d), B) the blue dotted downtrend line in place since May; C) back above “the Cloud.” Moreover, the daily Relative Strength Indicator (RSI) reached maximum overbought readings, while the Money Flow Indicator (MFI) closed well into the 80s. All are setups not seen since the correction from the $4400 all-time high (ATH) started, and thus the weight of the evidence suggests a new uptrend has begun.

Figure 1. ETH daily chart with EWP count and technical indicators.

The current rally is strong and looks impulsive

The first point I want to make is called “the traffic light.” It shows if the price is above the 10, 20, 50 and 200d SMAs (green arrow) or not (red arrow). When the traffic light is all red, ETH is below all its SMAs and in a downtrend: stop! Like it was in July. If it is above all its SMAs, ETH is in an uptrend: go! Like it is now. The traffic light helps me tell what the short- to long-term trends are, and if I should wear a Bullish or Bearish hat. A green traffic light tells me that the odds of good things, i.e., higher prices, are higher than during a red traffic light.

Besides, with price now back above “the Cloud” as well, these odds of “good things going to happen” have increased even more. Why? During the April to May ATH rally, the cryptocurrency was always above its 50d SMA and “the Cloud.” The current price action is developing a similar setup.

Based on the above and using the Elliott Wave Principle (EWP), I prefer to apply a bullish EWP count. Ideally, ETH bottomed for (blue) Primary wave-IV on July 20th, possibly already June 22nd, and should now be working on a few more minor 4th and 5th waves (green 5, red iii, iv) to complete a more extensive (black) major-1 wave of (blue) Primary-V. This wave-1 should ideally reach around $3000-3300, which aligns well with the triangle breakout target (blue arrows), followed by a wave-2 back to around $2500+/-100. A breakout back above the wave-1 high from those lower levels will then tell me wave-3 is underway. Ultimately, Primary-V should ideally target ~$9K.

Bottom line: For now, the focus is on the short-term to see if ETH can establish five waves up from its lows. It should not fall back below its Ichimoku cloud, nor its 200d SMA from current levels as that would -once again- severely damage the Bullish case. However, the current chart setup is much better than it was during late May and early July, and therefore, the Bulls have much better odds.

For a look at all of today’s economic events, check out our economic calendar.

Bitcoin’s Rally to $90K+ Took a Detour but Appears Back on Track

A month ago, see here, I showed the Bullish Elliott Waves (EWP) option for Bitcoin (BTC) looking for a rally to inittally low- to mid-$40Ks assuming a -what is called in EWP terms- 1,2,1,2 setup. Instead, it appears most likely, BTC formed an irregular flat (red) wave-ii (see Figure 1 below), completed wave-iii and is now in red (intermediate) wave-iv. Thus, IMHO, BTC took a detour but is still on track for $90K+ as long as can hold above $35495 on the current pullback. Allow me to explain.

Figure 1. Bitcoin daily chart with detailed EWP count and technical indicators.

$30K is ultimate line in the sand

What I originally viewed as a wave-i, ii, 1, 2, setup morphed IMHO into a wave-i, ii, a, b setup and the recent low on July 20th at $29320 was (green) minor wave-c of (red) wave-ii. Since that low, BTC rallied for ten consecutive days: wave-iii, which also subdivided nicely into five smaller (green) minor waves. A feat not seen since correction started mid-April. Besides, as you can see in Figure 1, BTC also rallied back above all its moving averages (10d, 20d, 50d) except the 200d SMA.

Moreover, the crypto currency was also able to rally back above its (green-red colored) Ichimoku Cloud. Lastly, the daily RSI5 and Money Flow Indicator (MFI14) have not been this overbought since Mid-April either. The latter is rather important as it shows BTC is experiencing genuine buying. All in all, since July 20th BTC has accomplished many good things, not seen since the entirty of the correction that started mid-April.

Because one can always find a bullish or bearish data point to support one’s biased view, it is the weight of the evidence approach that allows for a much more objective interpretation. In this case it is rather obvious the weight of the evidence is predominantly bullish. All BTC now needs to do is reclaim its 200d SMA. I have outlined in Figure 1 the preferred illustrative-only path BTC now should follow based on the preferred EWP count shown, as well as the technical indicators, i.e., the RSI and MFI are often max overbought at 3rd waves because those are the strongest waves, just as BTC experienced recently.

Bottom line: If BTC can hold above $35495 going forward (the red wave-i high made on June 24) and rally towards its 200d SMA from around current levels, then the chart shows a very good setup for five waves higher since the June 22nd low. That would then greatly increase the odds for a pullback, wave-2, before a strong rally to ideally new all time highs; wave-3. Ultimately, the triple bottoms around $30K made over the past three months must hold to prevent a bigger slide to potentially $20K. Based on the weight of the evidence I now prefer to look higher and maintain the Bullish perspective I already had a month ago.

For a look at all of today’s economic events, check out our economic calendar.

S&P 500 Reached the SPX 4300+ Target Zone. What’s Next?

One and two weeks ago, see here, by applying the Elliott Wave Principle (EWP), I was looking for the S&P500 (SPX) “wave-iii targets ideally SPX4289-4442, which fits very well with the SPX4315-4375 target zone found using the hourly chart (see my previous post).

On Wednesday, July 7, the index reached SPX4362, and yesterday it fell a little out of bed to SPX4289. The top reading is well within the ideal target zone and only 0.28% off the mark: well within the margins of error. Thus, is the wave-iii top in? And will the index now fall back to around SPX3940-4040 for a wave-iv, before wave-v of wave-3 rallies the index to SPX4442-4682? See Figure 1 below.

Figure 1. S&P500 daily chart with detailed EWP count and technical indicators

A break below the mid-June “FED low” is needed to confirm the more significant correction.

Since the early May low, there are now enough EWP moves in place to suggest the rally is complete. However, markets can always tag on another wave, so we have to remain vigilant and wait for a break below the mid-June “FED induced, we-will-raise-interest rates-sooner-than-we-say” drop to SPX4164 to know for sure. Using the simple moving averages (SMAs), we can also devise a “traffic light”: as long as the price is above the 10d, 20d, 50d, it is “go.”

As soon as the index closes below the 10d SMA, the light will turn orange: downside risk increases. And a daily close below the rising 50d SMA (now at SPX4217) will tell us the “traffic light” turned red, which means stop. In this manner, we have an objective way of knowing what to expect most likely next and the odds of a continued rally.

Figure 2. S&P500 hourly chart with detailed EWP count and technical indicators

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Lastly, the hourly chart above shows the index can have completed already five (green) waves up off the March low following an almost picture perfect Fibonacci-based EWP pattern, with wave-3 to the 1.382x wave-1 extension, wave-4 back to the 0.764x Fib-extension, and now wave-5 only 0.28% off the mark. When five waves are complete, always expect -at a minimum- three waves in the opposite direction. Thus, caution to the long side is advisable for swing- and short-term traders. Longer-term, this Bull has, IMHO still plenty of upside potential. It will require a break below the recent March SPX3723 low to tell us a multi-year correction is at hand.

For a look at all of today’s economic events, check out our economic calendar.

Ethereum: Potential Set Up for the Run to $9000 in Place

The ideal downside target zone was $1349-1503. ETH bottomed on June 26 at $1717 and has since staged an over 35% rally. Because the ideal downside target was not reached, the question is, “is the low in?”. In one of my recent daily Crypto Trading Webcasts, I suggested my Premium Members could initiate long positions on a close back above the 200-day Simple Moving Average (SMA). Stops could be placed on a daily close below it or at the June 26 low, for example. Straightforward, effective, and already highly profitable trading strategies.

Figure 1. ETH daily chart with EWP count and technical indicators.

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Short-term rallies look impulsive

Since the early June (black) major b-wave high there are five red (intermediate) waves down. Intermediate wave-v should ideally have bottomed around $1349-1503, but all we got was $1717. Thus wave-v could have been a failed 5th wave. Since ETH should still be in a robust long-term bull market, a failed fifth wave of a corrective C-wave down is not unexpected: buyers stepped in earlier. ETH then staged a five-day rally, which is a first since the early May all-time high, and it propelled itself back above the 10d, 20d SMA 200-d. Also, this is an encouraging sign because the last time we had such a setup at that aforementioned b-wave high. Moreover, the daily RSI5, MACD, and Money Flow Indicator (MFI) are making new highs since the >60% correction started. The only negative thus far for ETH is that it is still below its Ichimoku Cloud and 50d SMA.

However, the weight of the evidence is shifting in favor of the Bulls. Assuming the June 26 low was (blue) primary wave-IV (can also be labeled as major-4, depending on if one marks the 2017 peak as a Cycle wave or a Primary wave; respectively), ETH has an i, ii, 1, 2 EWP-setup in place. In layman terms, “it is making higher highs and higher lows.” That is Bullish. Assuming this EWP count is correct, then the internals of red wave-iii coincide well with the ideal green wave-3, 4, 5 framework. Assuming this ideal framework also applies to the internals of (black) major wave-1, we should expect it to top out around $3170-3030. This high is then only the 1st wave of the large Primary-V to ideally around $9000, and we know an impulse has five waves; we can expect a (black) major wave-2, 3, 4, and 5. The former two are shown, with the ideal wave-2 target zone shown as well. Wave-3 should then catapult to at least $4500 but will most likely extend to around $5900 instead.

Bottom line: ETH now has enough waves to the downside in place to consider the correction complete, and the postponed run to $9000+ could now be underway. The daily chart is improving from a technical analyses perspective, and as long as the Bulls can hold ETH’s price above the June 26 low of $1717, then there’s a Bullish EWP setup to propel ETH to initially the low $3000s. Warning signs of this setup not working are at first a move below this Monday’s low ($2160) followed by a move below the July 2nd low ($2017).

Has The Rally to $90K+ Started for Bitcoin?

Almost a month ago, see here, I was looking for Bitcoin (BTC) to bottom around $26K before the next rally would start. On June 22, BTC bottomed at $29247 and is now essentially stuck between $30830-34450. In sideways markets, the Elliott Waves (EWP) has some difficulties in determining the next most likely move as there are many possible options under such circumstances. In Figure 1 below, I am showing the Bullish option. My premium crypto trading members also have access to the possible Bearish path.

Figure 1. Bitcoin daily chart with detailed EWP count and technical indicators.

If last Saturday’s low holds, BTC has a Bullish setup.

Bitcoin fell a bit short of the ideal wave-v target zone of $24077-26750, as shown in my June 8 update, but did make a lower low below the May 19 $29563 (red) intermediate wave-iii low, which therefore technically suffices for a 5th wave. Yes, financial markets and crypto included do not always have to follow the ideal textbook patterns, far from it.

Thus, if BTC can hold last Saturday’s low and rally back above this week’s high from around current levels, then there is an excellent potential Bullish path in front of us. We then know the course is Bullish, but we do not know if BTC will take short-cuts, the scenic route, or follow the GPS instructions, so to say. Here I’ve outlined the ideal path, i.e., GPS instructions, as that is all I can go by for now.

Please note BTC is below its 50-day Simple Moving Average (SMA) and 200d SMA, which are Bearishly stacked (price<50<200). Thus, technically BTC is in a Bear market setup, and the odds of good things happening, i.e., higher prices, are lower than when BTC is above both SMA (price>50>200). See for example, the left side of the chart. Besides, BTC is also below its Ichimoku Cloud, adding weight to the Bearish evidence.

Bottom line: the daily chart of BTC is still bearish as its price is below critically important SMAs and the Ichimoku Cloud, diminishing the odds of higher prices. But, it has a potentially bullish setup in place if it can hold last Saturday’s low and rallies back above this week’s high. If that can happen, then BTC should be on its way to the low- to mid-$50Ks (major wave-1) before a more meaningful pullback starts (major wave-3), from where it can then stage its next significant rally to the $90Ks.

For a look at all of today’s economic events, check out our economic calendar.

S&P 500 Still On Track for SPX 4300+

Last week, see here, I showed how, IMHO, the S&P500 was in an ending diagonal (ED) 5th wave. Please read the Elliott Wave Principle (EWP) to learn what an ED, among many other price patterns, is. Using the hourly chart, I was still looking for SPX4315-4375 after the post-FED meeting dip earlier this month. This week I would like to zoom out and “dissect” the rally since the infamous March 2020 low. See figure 1 below.

Figure 1. S&P500 daily chart with detailed EWP count and technical indicators

The rally since March 2020 is still unfolding and has more room to run.

The beauty of the EWP is that in an impulse move, one knows with certainty after the third wave follows a 4th wave lower and then a final fifth wave higher. From the March 2020 low, I can count five (red i, ii, iii, iv, and v) waves higher into the June 2020 high for a (black) major wave-1. The 2nd low later that month was major wave-2, the August 2020 high the one-degree lower (red) intermediate wave-i of major-3, etc. Based on historical evidence, we know 3rd waves typically reach the 1.382 to 1.618x Fibonacci-extension of the 1st wave, measured from the 2nd waves low.

This is all “textbook,” but the market can do anything. Thus we only have an anticipated road map, which needs to be tracked daily to see if the index makes a detour, short-cut, or takes the scenic route. When the market departs, nobody knows which exact route it will take, but we have a reasonable expectation, i.e. a blueprint.

Major wave-3 should thus ideally target SPX4442-4682, but for now, the index is in (red) intermediate wave-iii of 3, and thus an intermediate wave-iv and v are still to be expected. Wave-iii targets ideally SPX4289-4442, which fits very well with the SPX4315-4375 target zone found using the hourly chart (see my previous post). Wave-iv should then ideally drop back to around SPX3940-4040, but please remember that upside surprises and downside disappoints in Bull markets. Wave-v of wave-3 should rally the index to SPX4442-4682.

Thus, short term, I am still looking for marginally higher prices, followed by a retest of the May lows before the next rally to dazzling new all-time highs starts to complete major-3. After that, I expect a multi-month major wave-4.

For a look at all of today’s economic events, check out our economic calendar.

 

Recent “Sell The S&P500 Signal” Was Only a Brief Dip: SPX4300+ Still Possible

Last week, see here, I shared my S&P500 (SPX) “Buy/Sell” indicator, which had switched to a “Sell the SPX” on June 16. The index dropped another 45p to as low as SPX4166 on Friday, June 18, but has now moved back to new all-time highs. Hence, the sell signal was correct, but my expectation the index would reach “SPX4050+/-50 before the next rally to new ATHs starts” was not entirely accurate as the SPX4166 low was too shallow.

Hence, based on the Elliott Wave Principle (EWP), I view the index as still being able to each SPX4315+/-5 because last week’s “dip” was most likely on a smaller 4th wave (grey wave-iv) of a more significant 5th wave (green wave-5 of red wave-v). See Figure 1 below.

Figure 1. S&P500 hourly chart with detailed EWP count and technical indicators

The rally since the early May low is still unfolding

Over a month ago, see here, I was looking for the index to rally to ideally SPX4315 +/- 5 for what I labeled as (green) minor-5. Back then, I had no idea how that rally would unfold, but with the new ATHs this week, I find it is turning into an ending diagonal (ED) in EWP terms. EDs are typical for 5th waves and are messy: it is all three waves instead of five, with lots of overlap. The rally from mid-May to last week’s high exemplifies this “mess”: the general trend is higher, but there are many back-and-forths daily. Of course, diagonals can always tack on another wave (while remaining diagonals), which is what happened last week as I thought the ED had ended. It sure could have, but the proportions of the smaller (grey) minute waves of the larger (green) minor waves are now with the recent rally much better and allow for the index to ideally reach SPX4315+/-5.

It will take a break below last week’s SPX4166 low from current levels to tell us the trip to SPX4050 has started. On the other hand, the index will need to break out above SPX4375 to suggest something much more Bullish is unfolding. For now, neither is my preferred POV.

For a look at all of today’s economic events, check out our economic calendar.

Ethereum: The Run to $9000 Was Delayed. Get Ready for the Next Try

Three weeks ago, see here, I showed a potential Bullish Elliott Wave Principle (EWP) path for Ethereum (ETH), “if ETH can rally above the $2920 high made last week, without dropping below Sunday’s low first ($2275) and especially not below $1736“.

Well, that rally over $2920 did not happen as the cryptocurrency stalled at $2890 on June 3 and subsequently dropped below $1736 two days ago. Thus the Bullish potential setup was negated. Does this mean the run to $9000 will not happen anymore? No, my work strongly suggests a bottom is much closer now. Let me explain.

Figure 1A below shows the monthly candlestick chart for ETH; as you can see, it has lost over 60% since last month’s all-time high (ATH). In addition, it did a 62% retrace of the rally that started in March last year. If we go back to 2017, we see ETH also lost over 60% of its value during the summer, which was also a 62% retrace. It then staged an almost 1000% rally. Thus, historically the current decline is still nothing out of the ordinary.

Zooming in, the weekly candlestick chart in Figure 1B shows ETH has so far only moved down in three EWP-waves from its ATH into this week’s low: red waves a, b, c. Corrections always move in at least three EWP waves.

Thus, based on the historical evidence and the EWP count, the current decline must still be viewed as a correction in a significant long-term uptrend until proven otherwise.

Figure 1. ETH monthly and weekly charts with EWP count and technical indicators.

Short-term, there is still downside risk, but also even more upside potential longer-term

The devil is always in the details, so allow me to zoom into the daily time frame. See Figure 2 below. It follows ETH should be in red wave-c of black wave-4. C-waves are mostly comprised of five smaller waves. In this case, green 1, 2, 3, 4, and 5. Green wave-3 reached the ideal target zone, and ETH bounced back to the ideal green wave-4 target zone. If all goes to plan, the cryptocurrency should soon do a final green wave-5 lower to the ideal target zone of $1349-1503. That sequence should set up a nice positive divergence on the technical indicators (RSI, MACD, FSTO, MFI) to allow the red-dotted anticipated path to unfold. But, if ETH can rally back above $2250 from current levels, then the odds have increased significantly that wave-5 to $9000 has already started. The next level to watch is then $2650, and ultimately $2920 needs to break.

Figure 2. ETH daily chart with EWP count and technical indicators.

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Bottom line: ETH failed to break above $2920 and instead moved below $1736 since my last update. Thus the cryptocurrency’s run to $9000+ was postponed. Now I am watching for a last more minor wave lower to ideally $1500-1300 before the rally to $9000 should commence. But a break above $2250 will start to give the Bulls an edge. The monthly and weekly charts support the notions the current 60% decline is still “merely” a correction within a larger long-term Bull market.

For a look at all of today’s economic events, check out our economic calendar.

A “Sell The S&P 500” Signal Was Given: Correction Underway

A little over three months ago, see here, I shared my S&P500 (SPX) “Buy/Sell” indicator, which had switched to a “Buy the SPX” on March 10. The index was then trading at SPX3950. Since then, it has gone through several more “buy/sell” signals, as you can see in Figure 1 below.

Back then, I was -based on the Elliott Wave Principle’s notion in that a 5th wave often equals the length of the 1st wave- looking for SPX4065-4185. The upper end was reached on April 16 when the index closed at SPX4185. A 6.0% gain in a month. Eventually, the index topped out June 14 at SPX4255 at the close, which is only 1.7% above my ideal target zone and thus within the +/- 2.5% margin of error I allow myself. Currently, the index is trading at SPX4200. Hence, another reliable forecast my premium major market members and you could trust and bank on.

Figure 1. S&P500 daily chart (blue) with overlayed Buy/Sell Indicator.

Sell signal supports the notion of lower prices ahead before the next rally

A month ago, I was looking for the index to reach ideally SPX4315 +/- 5. The S&P500 opened at SPX4257 on June 15. I was off by 1.2%, which is also within the acceptable margin of error as no one can forecast the exact highs and lows the markets will eventually make.

Thus, based on my previous two articles, I can say “mission accomplished.” The EWP count since the March low is complete (five waves up), while the forecasted upside targets were reached and slightly exceeded. Besides, with a “Sell the SPX” signal, I now expect a deeper correction lasting into the last two weeks of June. The exact date is unknown but should fall around June 23 +/- a few trading days. I continue to expect SPX4050+/-50 before the next rally to new ATHs starts. It should take the index to around SPX4500+/-100 by late July to early August. Once achieved, I expect a multi-month deep correction.

For a look at all of today’s economic events, check out our economic calendar.

Goldminers, GDX, Should Bottom Soon and Then Rally to $60

Using the Elliott Wave Principle (EWP) I will analyze the VanEcks Vectors Gold Miners Exchange Traded Fund (ETF, GDX) since its significant bottom in January 2016 and determine where it will most likely be headed next. See Figure 1A below. That bottom was blue Primary Wave-C. GDX then rallied into the summer of 2017 (black major wave-a). It took one year to correct as by the summer of 2018, major wave-b completed.

The ETF then rallied once again into early 2020 (major wave-c of Primary-A) and then crashed into the infamous March 2020 low (Primary B). The gold miners then staged a three-wave rally into -once again- the summer of 2020 (major wave-a). Yet again corrected for almost a year into the recent march low (major wave-b), and GDX has now staged a five-wave rally into its early May high. GDX is currently correcting and should ideally bottom around $35.30-36.50, but possibly as low as $33.30-34.30 before staging its next multi-month rally.

Figure 1. GDX weekly and daily charts with detailed EWP count and technical indicators.

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The Trend Has Changed From Down to Up

GDX held necessary support at $29-30, broke out of the downtrend channel it was in mid-April, retested that breakout late-April, and then also rallied above the critical 200-day Simple Moving Average (SMA) early May. Thus the trend changed from down to up. Besides, the Gold Miners are also back above the 20-week and 50-week SMA. The rally since the early-March low counts best as a motive wave: leading diagonal (red) intermediate wave-i, and the recent price action to the downside should thus be wave-ii.

We know from the EWP that after the 2nd wave comes the third wave, which makes sense from the bigger picture as GDX should now be in major-c of Primary C of Cycle-A and comprises five smaller waves: red iii, iv, and v. Strong support is at $34.40 to $33.30. As long as GDX can hold above it, the odds are excellent wave-iii can kick in to ideally the low to mid-50s and wave-v of -c of -C of -A to ideally around $60. Hence, the current correction should be viewed as a buying opportunity once the ideal target zones are reached, with a prudent stop level as mentioned above.

For a look at all of today’s economic events, check out our economic calendar.

Bitcoin Should Bottom at Around $26K Before the Next Rally Starts

Using the Elliott Waves (EWP), see Figure 1 below, I view Bitcoin (BTC) as completing the green (minor) wave-5 of red (intermediate) wave-c of black (major) wave-4. Since Elliott waves are fractal, BTC is currently wrapping up even smaller waves (grey minute waves-iii, iv, and v), with the ideal Fibonacci-based target zone shown for each, respectively.

Figure 1. Bitcoin daily chart with detailed EWP count and technical indicators.

Bitcoin should bottom soon and then rally to at least $50K, ideally new all-time highs.

As you can see, BTC has been chopping around since its mid-May low, in what is called a triangle in EWP terms. Once the triangle completes, which from a technical analyses perspective is called a Bear flag, the price will break down and travel south about equal in length to the triangle’s width: small red dotted down arrow.

That then targets right into the ideal (grey) minute-v target zone, as well as the perfect (green) minor wave-5 target zone: the 176.4 to 200.0% Fibonacci-extension of minor wave-1, measured from the top of wave-2. Note that the mid-May low was minor-3 and bottomed almost precisely at the 161.8% Fib-extension of wave-1. Then green wave-4 initially reached the 100% extension. Picture perfect so far, and thus I must anticipate a picture perfect wave-5 bottom until proven otherwise.

The technical indicators (RSI5, MACD, MFI) set up potential positive divergence (dotted green arrows), which means the currency is moving lower but on less strength, momentum, and money is moving back into Bitcoin. The latter is very important because liquidity drives markets.

When the five waves down complete, a larger irregular flat wave-4 should end, and I anticipate the next multi-month Bull run to $100K +/- 10K to start. Since the financial markets are all about probabilities of possibilities, the alternative (labeled as “alt: III, alt: a, alt: b”) is BTC will “only” rally -in three overlapping waves- to around $50K+/-5K for a bounce and then head south again. Why? Because after five waves down, one must at a minimum expect at least three waves back up.

Bottom line: BTC is IMHO fast approaching a tradeable bottom from where one can expect at least an almost doubling in price, preferably a quadrupling. As usual, I will continue to monitor the price action as we move higher to see which two it will become. I prefer the latter but will gladly also take the former. A doubling is nothing to sniff at.

For a look at all of today’s economic events, check out our economic calendar.