Ethereum: The Dreaded C-wave Is Here

Ethereum Elliot Wave Analysis

Two weeks ago, I showed Ethereum’s (ETH) trend was not friendly and that “… one should be (very) cautious on the long side and maybe even forego buying ETH until the trend is more friendly and provides Low Risk (LR) entries. Therefore, current buying is High Risk (HR), especially since the SMAs are bearishly stacked: the 10d SMA is below the 20d< 50d SMA< 200d SMA.” Fast forward, and ETH has dropped a whopping 41% since. I hope you headed my warning.

That brings me to my early April article, where I shared my Elliott Wave Principle (EWP) analyses. I was (since January of this year) looking for a bounce to ideally $4250+/-250, but warned that “A drop below $3000 will be the first sign $4000 may not be reached, and a retest of the low-2000s should then be expected.

ETH even overshot that downside target as it bottomed at $1714 today. Talk about the EWP as a powerful tool in knowing what will happen when a certain price level breaks to the upside or downside. My premium members rely and bank on these insights.

All that being said, what’s next for ETH? Well, the anticipated path, see Figure 1 below, has come to pass and fruition, and ETH has now reached the ideal downside target zone for the potential wave-IV I am tracking.

Figure 1. Ethereum Weekly chart with detailed EWP count and technical indicators.

The c-wave potential materialized.

C-waves are made up of five smaller waves. In this case, waves i, ii, iii, iv, and v. Although not shown here as the weekly chart doesn’t allow for such detail, ETH should now be wrapping up wave iii. Shorter-term, i.e., over the next few days, ETH can still wrap up some smaller 4th and 5th waves (of the minute and minor degree) to complete the higher-degree intermediate-iii wave, but technically wave-iii has done enough. Thus, it is time to start looking for that wave-iv bounce to ~$2450+/-50K, which should be a multi-day event.

Because of the EWP, we know waves four and five come after the third wave. Thus, when wave-iv is complete, ETH should do one last stab lower for wave-v to ideally ~$1500+/-100. That will wash out even the most stubborn Bulls and allow ETH to get ready for its next Bull run.

Bottom Line and Ethereum Price Forecast

Two weeks ago, I concluded, “ one should be (very) cautious on the long side and maybe even forego buying ETH until the trend is more friendly.” I was correct as ETH lost >40% since. The C-wave, C is for Crash, is underway. It should bottom out soon, allowing for a brief rally back to ideally around $2450+/-50, followed by a last 5th wave lower to ideally ~$1500+/-100. These price targets are based on currently available price data and will be updated accordingly when new price data becomes available.

Bitcoin: The dreaded C-wave Is Here

Bitcoin Elliot Wave Analysis

Two weeks ago, I shared that Bitcoin (BTC) had essentially flatlined and how, from an Elliott Wave Principle (EWP) perspective, this sideways price action could become an elaborate triangle (see here). Or it could turn into “a more immediate downside setup to ~$25K … to complete the enormous 4th wave it is carving out before it is ready to rally to $100K+ for its next more significant 5th wave.” (See here and here). And I presented a three-step process :

  1. “Stay below last week’s high ($42997) and especially the late-March high ($48208).
  2. Close below the February low ($34350). That opens up the potential to target $28-30K.
  3. Close below the January low to confirm the impulse pattern’s ideal downside target of $25-27.5K.

Thus one had clear if/then parameters in place, which could be used as stops, as over the last two weeks, BTC did all of these three items and reached the 3rd wave target zone: it bottomed at $25838 today. See Figure 1 below.

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

The more straightforward 4th wave potential materialized.

As stated in my previous update, “BTC is now at the stage where we can start to minimize our options and focus on two. The triangle … and … the completion of a simple zig-zag: a-b-c; 5-3-5. From its November 2021 all-time-high into the mid-January low, BTC completed wave-a. The subsequent multi-week bounce was wave-b. Now the cryptocurrency should be completing the 5-wave c-wave. Last week it already topped right in the ideal (red, intermediate) wave-ii target zone and is currently trading below the tentative but preferred wave-i low. Thus wave-iii should now be underway, followed by iv and v, as shown in Figure 1.

All of this has come to pass, except for the wave-iv and v. Shorter-term, i.e., over the next few days, BTC can still wrap up some smaller 4th and 5th waves (of the minute and minor degree) to complete the higher-degree (red) intermediate-iii wave, but technically wave-iii has done enough. Thus, it is time to start looking for that wave-iv bounce to ~$34+/-1K, which should be a multi-day event.

Because of the EWP, we know waves four and five come after the third wave. Thus, when wave-iv is complete, BTC should do one last stab lower for wave-v to ideally ~$24+/-1K. That will then have washed out even the most stubborn Bulls and allow BTC to get ready for its next Bull run.

Bottom Line and Bitcoin Price Forecast

Two weeks ago, I concluded, “Thus the stage has been set. The conditions are in place for a more direct route to the downside. All BTC must do is provide the triggers according to the aforementioned “three-step program.” BTC complied and triggered each step, which for traders can be used as binary if/then parameters, e.g., stop (loss) levels, and the forecasted $25-27.5K region has been reached.

So far, so good, no surprises. I, therefore, prefer to look for a multi-day bounce back to ~$34+/-1K soon, with the lower end preferred, followed by a final stab lower to ~$24+/-1K. That should then complete a much larger-degree 4th wave correction and allow BTC to start its rally to $100K.

S&P500 Update: The Dreaded “final stab lower” Came. What’s Next?

S&P 500 Elliot Wave Analysis

Over the last month, I have been tracking how the ongoing correction in the S&P500 (SPX) should unfold using the Elliott Wave Principle (EWP). Back then, based on the available price data, I started with,

a bounce to SPX4500+/-25 soon from where the subsequent decline to ideally SPX4150+/-25 can start. Once that target zone is reached, the index should bounce again to SPX4315+/-25, followed by a final decrease to SPX4050+/-25.“ Let’s see what happened using Figure 1 below.

Last week, when the index bottomed at SPX4062 I wondered if that was all of green wave-5 or “if the market may have one more trick up its sleeve as that final stab lower – deeper in the ideal SPX3975-4040 target zone- can not yet be excluded just yet.” I concluded, “A move above SPX4308 will be an excellent first sign, with confirmation above SPX4515. If those two levels are reached over the next few days and weeks, the anticipated rally to SPX5500+ has most likely begun.” With the index dropping to as low as SPX3958 today, let’s assess.

Figure 1. SPX daily candlestick chart with detailed EWP count and several technical indicators

The trick the market had up its sleeve

Last week, the FED-induced rally topped out at $4307.66, and the Bulls thus clearly fumbled the ball into the end zone, as they say in American football. Four days later and the index reached the ideal SPX4040-3975 target zone. I had to adjust my EWP count from a green wave-3 and 4 made on April 25 and 28 to May 2nd and 4th instead.

These minor adjustments are expected as one cannot get/interpret every market move correctly and why I stated the market could have one more trick up its sleeve. Indeed, as shown in Figure 1, the index has followed the ideal Fibonacci-based EWP-impulse path already laid out a month ago (see here) fairly accurately. I do not know any other tool or method that can accurately and reliably forecast how the markets should move that far in advance. With this knowledge my premium major market members can navigate the markets successfully.

Bottom Line and Forecast

Last week, the Bulls had to clear SPX4308 but failed. The market had indeed the dreaded “one more trick up its sleeve as that final stab lower – deeper in the ideal SPX3975-4040 target zone-“ materialized. At this stage, the index could have a few smaller scribbles left to reach potentially as low as SPX3925+/-5 for a picture-perfect c=a relationship.

Still, per the EWP, it now has done enough waves since the late-March bounce high to consider the entire correction complete. A break back above SPX4160 will be the first warning for the Bears. The 2nd warning is at SPX4308, and the 3rd and final sign is at SPX4515. When those levels are breached, the next and final run to SPX5500+ should be underway.

S&P500 Update: a Sustained Bottom Could In

S&P 500 Elliot Wave Analysis

Over the last three weeks, see here, here, and here I have kept you abreast of how the current ongoing correction in the S&P500 (SPX) should unfold using the Elliott Wave Principle (EWP).On April 13th, I found,

a bounce to SPX4500+/-25 soon from where the subsequent decline to ideally SPX4150+/-25 can start. Once that target zone is reached, the index should bounce again to SPX4315+/-25, followed by a final decrease to SPX4050+/-25.“ Let’s see what happened using Figure 1 below.

The index topped at SPX4513 (green wave-2), dropped to SPX4163 (green wave-3), rallied to SPX4308 and (green wave-4), and bottomed yesterday at SPX4062 (green wave-5?). Thus, using the EWP, I have been able to forecast each low and high, so far, weeks ahead of time. That bakes the question if news and other externalities drive the markets or if the stock market marches to the beat of its drum?

Figure 1. SPX daily candlestick chart with detailed EWP count and several technical indicators

Impulse lower unfolded as it should. Is it complete?

Thus, once I determined the Bulls had fumbled the bull on April 13th, the index has since followed a standard Fibonacci-based impulse pattern to the downside to the T. Although it does not work this beautifully all the time, it does mean that a sustainable bottom is most likely in or very close.

Namely, one last stab lower (a final 5th of a 5th wave) deeper in the ideal SPX3975-4040 target zone can not yet be excluded. But it is not necessary; there are enough waves in place, and all the target zones have been reached. Or, as they say, “do not bank on the fifth of fifth waves.”

Bottom Line and Forecast

Now that the SPX dropped in my ideal target zone of SPX4050+/-25, it is time to start paying attention to the possibility of a sustainable bottom in place. A move above SPX4308 will be an excellent first sign, with confirmation above SPX4515. If those two levels are reached over the next few days and weeks, the anticipated rally to SPX5500+ has most likely begun. But as always, I will continue to monitor the price action to see if the market may have one more trick up its sleeve as that final stab lower cannot be excluded just yet.

Bitcoin Flatlined This Year: Part II

Bitcoin Elliot Wave Technical Analysis

Yesterday I showed that Bitcoin (BTC) has essentially flatlined year-to-date and how, from an Elliott Wave Principle (EWP) perspective, this sideways could become an elaborate triangle. As shared recently, see here, the other option BTC has is a more immediate downside setup to ~$25K. It should complete the enormous 4th wave it is carving out before it is ready to rally to $100K+ for its next more significant 5th wave.

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

A more straightforward 4th wave potential

As stated in previous updates, 4th wave corrections can take on at least 12 different patterns. Thus, knowing which it will be beforehand is impossible, and knowing which it is when the correction is underway requires the availability of more price data. BTC is now at the stage where we can start to minimize our options and focus on two. The triangle was discussed in detail yesterday, and today we can focus on the completion of a simple zig-zag: a-b-c; 5-3-5. See Figure 1 above.

From its November 2021 all-time-high into the mid-January low, BTC completed wave-a. The subsequent multi-week bounce was a three-wave b-wave. Now the cryptocurrency should be completing the 5-wave c-wave. Last week it already topped right in the ideal (red, intermediate) wave-ii target zone and is currently trading below the tentative but preferred wave-i low. Thus wave-iii should now be underway, followed by iv and v, as shown in Figure 1.

Later this year, a possible tag of the 200-week simple moving average (forwarded in time with the dashed red line) would be an ideal setup. But it is not necessary. The c-wave can morph into an overlapping ending diagonally, but the ultimate and perfect downside target remains about $25-27.5K.

Besides, note how the money flow indicator (MFI14) has increased since the February lows. Thus at this stage, believe it or not, money is flowing slowly back into BTC.

Bottom Line

BTC is in a multi-month 4th wave correction of the same degree as the wave that ended in 2018 after the 2017 top. Fourth waves are tricky and can morph into at least 12 different patterns. Now that more data has become available, I can narrow it down to the two most likely. In yesterday’s update, I discussed the triangle. In today’s update, I show that BTC’s setup can also support a more immediate downside setup:

  1. Stay below last week’s high ($42997) and especially the late-March high ($48208).
  2. Close below the February low ($34350). That opens up the potential to target $28-30K.
  3. Close below the January low to confirm the impulse pattern’s ideal downside target of $25.-27.5K

Thus the stage has been set. The conditions are in place for a more direct route to the downside. All BTC must do is provide the triggers according to the aforementioned “three-step program.”

Bitcoin Flatlined This Year. What to Expect Next?

Bitcoin Elliot Wave Technical Analysis

Bitcoin (BTC) closed off the year 2021 at $46197 and is now trading at $40297. A loss of only 12.8%, but everybody is bearish. Meanwhile, it traded as low as $32991 on January 24th and as high as $46669 on March 28th of this year. Essentially all of BTC’s price action this year has been contained between $35500 and $45500 with a $40500 mid-point.

From an Elliott Wave Principle (EWP) perspective, sideways markets are the hardest to forecast as it opens up many possibilities. Knowing which is the most probable becomes more of an educated guess than when the cryptocurrency is in a much more well-defined impulse-based uptrend. See Figure 1, for example.

Bitcoin had a clear defined impulse pattern going into the early-2021, blue Primary-III, high, and then a clear five-waves impulse pattern from the June lows to the November 2021 highs. According to my bigger-picture EWP work, BTC should have topped for a (pink) Cycle-3 wave and now in a Cycle-4.

In my previous update, see here, I showed if BTC was establishing a more immediate downside setup to ~$25K for wave-C4. Or if it would become more complicated because 4th waves are notoriously tricky. I would like to deep dive into the miore complex scenario in today’s update.

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

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4th waves are often complex triangles or flats

The complex 4th wave scenario has BTC morphing into a triangle. See Figure 1. The counter-trend rally, wave-B, is subdividing into an intricate a-b-c pattern. Black major wave-a and -b are complete, and wave-c is under this scenario underway. Ideally, it should target ~$60K and fulfill my original call from four months ago. How do we know this pattern will emerge? As long as BTC can stay above the ascending dotted blue trend line and rallies back above the late March high (dotted green line).

Bottom Line

BTC is in a multi-month 4th wave correction of the same degree as the wave that ended in 2018 after the 2017 top. Fourth waves are tricky and can morph into at least 12 different patterns. Knowing which of these beforehand is impossible. At this stage, BTC has the setup in place to morph into a complex triangle, but it requires three things to make that happen:

  1. Hold above the trendline that connects the January and February lows, and which currently resides at around $36900.
  2. A close back above this year’s mid-value of $40,500. That opens up the potential to target $45,500 once again.
  3. A close back above the late-March high of $46669. Then the potential larger a-b-c pattern of wave-B to ideally $60K gets triggered.

Thus the stage has been set. The conditions are in place for a complex triangle. All BTC must do is provide the triggers according to the mentioned above “three-step program.”

Is It Time to Go Long Ethereum, or Should You Wait?

Ethereum Technical Analysis

Although I primarily use the Elliott Wave Principle (EWP) to keep my premium crypto trading members abreast of where Ethereum (ETH) should top or bottom, one should never use any tool in a vacuum and apply other metrics to help assess if it is time to go long or not. Maybe even when to short it.

The best way to help assess the trend of ETH, and any asset class for that matter, is to look at where its price is in relationship to several moving averages (SMAs) and, in this case, the Ichimoku Cloud. See Figure 1 below.

Figure 1. ETH daily chart with simple moving averages (SMAs) and Ichimoku Cloud.

Trend Analyses for Trading

If ETH is trading above its rising SMAs and above the Cloud, like during most of last year, we know the trend is bullish, up, and dips should be bought until the trend ends, like in May and November 2021. See also here. Conversely, when ETH is below its SMAs, especially the 200d SMA (in red in Figure 1) and the Cloud, the trend is Bearish, down, and one should be much more conservative when buying dips, trade smaller, have tighter stops, and take profits quicker.

It also means in Bull markets, one’s entry can be less precise, not that it should, as eventually, the price of ETH will go up anyway, and you’ll make your money. Or, as they say “in a Bull, everyone is a hero.” Therefore, Bear markets separate the professionals from the amateurs as they require precise entries and exits to not lose all your hard-earned money.

The trend is your friend chart can help you. The traffic light in the upper left corner in Figure 1 can be either green or red. In the former case, ETH is Bullishly trending; in the latter case Bearishly. Currently, the Traffic Light is red: ETH is below its SMAs and the Cloud. Thus one should be (very) cautious on the long side and maybe even forego buying ETH until the trend is more friendly and provides Low Risk (LR) entries.

Therefore, current buying is High Risk (HR), especially since the SMAs are bearishly stacked: the 10d SMA is below the 20d < 50d SMA < 200d SMA. Not friendly. Therefore, it may be better to forego a 20% rally to have a more favorable trend that can provide an LR entry and possible triple-digit gains, similar to the summer and fall of last year. Indeed, good things take time, and patience gets rewarded.

Lastly, a simple price chart like in Figure 1 can provide us with crucial breakout levels that ETH needs to clear to establish a new bullish trend. The first level, at ~$3000, is an HR entry. The 2nd level at ~$3200 is Medium Risk (MR), and if ETH can clear the 200d SMA, any buying is considered LR. Note, nowhere does it say “No Risk.” There’s always risk involved, so please also place stop losses accordingly to protect your money if the trade goes south. With high risk comes a higher reward and a higher chance of a failed trade, so please always trade according to your risk appetite.

Bottom Line

Ethereum is in a Bearish downtrend and should be traded accordingly. Knowing the trend can help tremendously in determining A) how to trade and B) what the chances are for a successful trade. Having that information available is professional trading.

S&P 500 Update: How Low Can It Go Before a Sustained Bottom Is in?

S&P 500 Elliot Wave Technical Analysis

Over the last few weeks, see, for example, here and here, I kept you abreast of how the current ongoing correction in the S&P500 (SPX) should unfold using the Elliott Wave Principle (EWP). So far, the index has not disappointed. Namely, the anticipated multi-day bounce to SPX4500-4534 came and went as the index topped at SPX4513, right in the ideal target zone on April 20th. Now the S&P500 is trading at the low 4200s. Thus the forecasted “subsequent decline to ideally 4150+/-25 … (green c/3).” is underway. See Figure 1 below. Thus, the EWP has been a fantastic, accurate, and reliable tool to forecast the stock market’s next moves well in advance. Something my premium major market members can highly appreciate and use.

S&P 500 Forecast

So, the question is, “what’s next?”

Figure 1. SPX daily candlestick chart with detailed EWP count and several technical indicators

Correction is unfolding as it should.

Albeit one always has to “anticipate, monitor, and adjust,” for now, the index is progressing as anticipated. I see, therefore, no reason to change the next part of my forecast: “Once that target zone [4150+/-25] is reached, the index should bounce again to 4315+/-25 (4), followed by a final decrease to 4050+/-25 (green wave-5, of red wave-c, of black wave-4).” other than a minor tweak in that wave (c/3) could stall at the 123.60% extension (SPX4185+/-5), and wave-4 could bounce back to as high as the 61.80% level (SPX4345+/-5).

Bottom Line

The EWP continues to run supreme because last week, the S&P500 bottomed right where I thought it would, 4375 vs. 4370, and staged the anticipated rally also right to where I thought it would; SPX4500+/-25 vs. 4513. The expected subsequent decline to ideally SPX4150+/-25 (green c/3) is now underway, but it could stall at SPX4185+/-5. I, therefore, continue to expect a bounce soon -within the next few days- to ideally SPX4245-4345 before the last leg lower of this significant correction that started January 4th completes at ideally SPX3975-4040.

Multi-Day Bounce Expected for The S&P500

The S&P500 dropped to 4370 on April 18th and rallied a daily later to SPX4471. Thus, so far, so good. See Figure 1 below.

Figure 1. SPX daily candlestick chart with detailed EWP count and several technical indicators

How the correction should unfold.

Corrective price action is always fraud with lots of twists and turns, but the two-week decline since the late-March high (red, intermediate wave-b) should require a multi-day correction, and so far, the current rally off the 4370 low has only lasted one day whereas the decline was two weeks.

Yes, B-waves consist of three smaller waves: a, b, and c. Albeit the index has already reached the lower end of the ideal (green) minor-b/2 wave’s target zone, see Figure 1 above, it has likely only completed wave-a of b/2. Hence, I expect a pullback to 4410-4430 for (grey) minute wave-b before wave-c of b/2 takes hold and rallies the index back to around 4500-4535 (upper grey target zone), depending on where the more miniature wave-b bottoms and how much wave-c extends (1.0x a or 1.618x a).

Bottom line

The S&P500 bottomed right where I thought it would, 4375 vs. 4370, and staged the anticipated rally. This rally should be part of a multi-day bounce, and a short-term pullback to ideally 4410-4430 should now be underway before the Bulls can rally the price to 4500-4535, which fits well with my initial idea last week of a high at around SPX4500+/-25.

I still expect a decline to ideally SPX4150+/-25 (green c/3) etc. (red arrows). It will require a breakout above SPX4435 to suggest something else is unfolding (green arrow). Thus, as I always say, “All we can do is anticipate, monitor, and adjust.”

Is Bitcoin’s Counter-Trend Rally Done?

Bitcoin Elliot Wave Analysis

In late March, see here, I found that Bitcoin (BTC) should ideally target ~$55K. Unfortunately, the cryptocurrency did not reach higher than $48.2K and fell to as low as $38.6K yesterday, whereas I expected a more typical pullback to around $44.4K. Although I got the general path right, it missed the mark. Is this a case of “upside disappoints and downside surprises in Bear markets?” It most likely is because, according to the Elliott Wave Principle (EWP), BTC is in a large 4th wave (Primary IV). Fourth waves are one of the most tricky, unreliable, and least-sensible price structures any asset class can go through. Allow me to explain.

As many of my premium crypto trading members know, corrections are always made up of at least three waves: A-B-C. Each of these waves can subdivide in several ways: 5-3-5 (zig-zag), 3-3-5 (flats), and 3-3-3 (triangles). Given that

  1. zig-zags can be single, double, or triple;
  2. there are six different flat corrections;
  3. at least three triangular patterns (symmetrical, ascending, descending), which can subdivide;

It is nearly impossible to know beforehand which of these 12+ corrective patterns the market will choose. Thus, all one can do is “anticipate, monitor, and adjust” because the final pattern will eventually emerge. Start with the most basic form A-B-C as a zig-zag and then see what it morphs into, or as I always say, “after three waves down, always expect at least three waves back up.”

Besides, focusing on the forest and not the trees allows us to see the bigger picture and not get too hung up on the daily scribbles, which are inherently much more variable in a multi-month corrective pattern than during a Bull run.

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

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What Pattern Is Emerging?

Although, as said, I so far missed the mark on where I ideally would have liked to see BTC top ($55K vs. $48K), please know already in early January I was looking for “a last drop to around $32+/-2K.” and back then “I expect[ed] this b-wave to challenge the resistance zone at $57.5K to $60K.” See here.

What has happened since? BTC dropped to $32.9K and rallied to $48.2K. Now that the upside target was not reached is simply based on an initial assumption, which is “the anticipate” phase. I honestly do not know of any other tool available that can forecast such price movements months ahead of time.

Thus, after three waves down and three waves back up, the question now is whether the corrective bounce is already over or if we can expect it to become more complex. Figure 1 above shows the two main options currently on the table. Ultimately Bitcoin will choose one of them, and we will be ready: forewarned is forearmed.

The simplest option is that (black) major wave-a and -b of (blue) Primary-IV are complete, and wave-c of IV is now underway. C-waves are often made up of five smaller waves, which I have outlined in Figure 1A in how they should ideally progress. The ultimate downside target zone is $25,5-28K, which should align with the 200w SMA (summer of this year). How do we know this path will be taken? A rally to the “wave-ii?” target zone and a break below yesterday’s low.

The alternative is that Primary IV is becoming more complex and morphing into a triangle. See Figure 1B. The counter-trend rally, wave-b, is subdividing into an intricate a-b-c pattern. Red intermediate waves a, b are complete, and wave-c is underway. It should ideally target ~$59.8K and, finally, fulfill my original call from four months ago. How do we know this path will be taken? Simple. As long as yesterday’s low holds and the price of BTC rallies back above the late March high.

Bottom Line and Bitcoin Price Forecast

BTC is in a multi-month Primary-IV correction of the same degree as the Primary-II wave that ended in 2018 after the 2017 Primary-I top. 4th waves are tricky and can morph into at least 12 different patterns. Knowing which of these beforehand is impossible. Now that more price data has become available, it appears two options remain, and BTC can soon determine the proverbial “last man standing.”

  • Rally to around a $44+/-1K and drop below yesterday’s low opens up the door to $25,5-28K for Primary-IV. And from where the Primary-V rally to $150K+ can start.
  • Hold today’s low, break above the late-March high, and rally to around $69+/-1K before falling back to around current levels for Primary-IV. And from where the Primary-V rally to $150K+ can start

Thus the stage has been set. We anticipate the next move and can monitor it to see which of these two options BTC will choose.

S&P500 Update: Correction Continues?!

S&P 500 Elliot Wave Analysis

In my last update, see here, I found using the Elliott Wave Principle (EWP)I do not want to see the index go below SPX4390 as this possible [smaller] 4th wave becomes too deep, increasing the odds there will be no 5th wave. Consequently, the recent high was then based on only three waves up: wave-3/c. That means the index most likely experienced a counter-trend rally, which always comprises at least three waves: a, b, c. … and a retest of the February lows is then a real possibility.

Today the S&P500 (SPX) dropped to SPX4381, increasing the odds of a continued correction, and the rally to SPX5500+ will be postponed by many more weeks. Allow me to explain using Figure 1 below.

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

How the Correction Could Continue?

With the index going below SPX4390, the possible 4th wave I was tracking became too deep and the price overlapped with the possible wave-1, bullish cut/off level in blue, which is not allowed in EWP standard impulse pattern. Hence, the 1/a, 2/b, 3/c paths I was tracking turned into an a, b, c. Please remember, albeit the stock market trends higher longer-term and therefore five-wave impulses to the upside are preferred; when a rally starts, one does not know if it will be five waves up or only three.

Consequently, one has to label the rally as both until the market disproves one or the other. Due to the overlap, the 1, 2, 3, 4, 5 potential is disproven, and the a, b, c rally is more likely. This, in turn, means a more significant B-wave bounce most likely ended in late March, and the next C-wave lower should be underway.

Since C-waves often comprise five waves, I have plotted the anticipated path for the next few weeks. Given the decline to today’s low counts best as a five-wave leading diagonal, with maybe a few marginal scribbles left, I expect a bounce to materialize soon to around SPX4500+/-25, from where the next leg lower, (green) wave-3/c, can occur, etc. See figure 1, dotted arrows.

Bottom Line and Forecast

The Bulls fumbled the ball and allowed for critical price-overlap to happen, which strongly suggests the correction that started on the first trading day of this year will continue and last for several more weeks. Therefore, I expect a bounce to SPX4500+/-25 soon from where the subsequent decline to ideally SPX4150+/-25 can start.

Once that target zone is reached, the index should bounce again to SPX4315+/-25, followed by a final decrease to SPX4050+/-25. Now we can let the market do its thing, see how it will fill in this anticipated path, and make minor changes if necessary. Or, as I always say, “All we can do is anticipate, monitor, and adjust.”

Ethereum’s Countertrend Rally Should Ideally Reach $4000, but Bulls Beware

Ethereum Elliot Wave Analysis

In last week’s Elliott Wave Principle (EWP) based update, see here; I concluded for Ethereum (ETH), “expect a pullback before ETH moves higher again into the ideal red- and black target zones. Think $3700-4000. I have anticipated a countertrend rally in ETH since late January to “ideally about $4250+/-250.” ” Fast forward and ETH dropped over 12% since its April 3rd high into today’s low. Bingo, so far so good, no surprises, which my premium crypto trading members do not like either.

Regular followers of my work know I prefer the “see the forest through the trees” approach: zoom out to larger time frames and the EWP waves will pop out much more easily, increasing the tools’ accuracy and reliability. Figure 1 below shows the weekly chart, with a focus on what ETH has been doing in the green box.

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

ETH Technical Analyses

As my premium crypto trading members know, any correction always consists of at least three Elliott waves: wave-a, wave-b, and wave-c. In this case, we are looking at a countertrend rally, i.e., corrective rally/dead cat bounce (black wave-b in Figure 1), of the November through January decline before the next leg lower starts (black wave-c).

Thus, this black wave-b will comprise three smaller waves: red (intermediate) waves a, b, and c. The former two have, IMHO, already been completed and the latter is underway. C-waves most often comprise five smaller waves, and so far I can only count three waves up from the red b-wave low made in February.

Thus, I expect soon a final (green) minor wave 5 to ideally $4000 (green dotted arrow). That will then complete the larger b-wave bounce at the typical 62% retrace of the initial decline before the larger c-wave can start. Note the green dotted arrow represents a typical 5=1 relationship. However, please note ETH has already reached the heart of the ideal b-wave/bounce target zone at last week’s $3580S high and reversed this week. Thus technically it has done enough to consider the counter-trend rally complete.

ETH Price Forecast

ETH has now technically done enough to consider the counter-trend rally complete. However, a last smaller 5th wave rally to ideally $4000 would look best as that would complete a five-wave C-wave off the February lows. A drop below $3000 will be the first sign $4000 may not be reached and a retest of the low-2000s should then be expected.

Meanwhile, a break back above $3600 from about current levels does set its sight on this key level. That will then at long last fulfill my call since late-January that ETH would target $4250+/-250 for a counter-trend rally. It has taken its sweet time, but I do not control the markets and time is not of the essence. What matters is the price as we now have clear if/then scenarios in place to know what will happen next on a breakout vs breakdown. Trade accordingly.

Is Trouble Brewing for the S&P500?

S&P 500 Elliot Wave Analysis

In my last update, see here, I started with, “My preferred method of analyzing the S&P500 (SPX) and other indexes is the Elliott Wave Principle (EWP).” Unfortunately, my last update was wrong as the index did not advance like in November last year, despite a plethora of similar setups between then and now. Yes, I am not afraid to acknowledge when I am wrong because nobody always gets it right in the markets. That is impossible. And one can only become better by realizing the mistake, learning from it, and moving on.

Thus, it is back to the trusted EWP, as I last shared in late March. See here.

Figure 1. S&P500 daily candlestick charts with several technical indicators and moving averages

After three come four and five, but if there is no five the Bulls are in trouble.

In a standard, Fibonacci-based impulse wave-3 typically tops at around the 1.618x extension of wave-1, measured from the wave-2 low and wave-4, then bottoms ideally at the 100% extension, followed by wave-5 to typically the 200.0% Fib-extension. See Figure 1 above. The S&P500 topped last week a little higher, close to the 176.40% extension, and then started to decline.

On April 1st, I shared with my premium major market members that I expected a multi-day decline in three waves: grey waves a, b, and c in Figure 1A. Since then, the price action has not disappointed, and so far, there are three waves lower from the (green) minor-3/c top. See Figure 1B.

Besides, today the index reached deeper into the ideal (black and green) target zones for a possible wave-4, with a classic c=a relationship at today’s low. The grey target zone shows how low the (grey) minute-c wave can go, but I do not want to see the index go below SPX4390 as this possible 4th wave becomes too deep, increasing the odds there will be no 5th wave. Consequently, the recent high was then based on only three waves up: wave-3/c. That means the index most likely experienced a counter-trend rally, which always comprises at least three waves: a, b, c.

US Stock Market Technical Forecast

It is essentially “do-or-die time” for the Bulls. Stem the bleeding at ideally around SPX4430+/-30, or suffer the consequences if the SPX breaks below this range. That will mean the rally into the late-March high was most likely only three waves, and a retest of the February lows is then a real possibility. But, if the index bottoms in this range and rallies back above this week’s bounce high, we can look towards a top around SPX4705+/-15.

The if/then scenarios are the beauty of the EWP: we know in an impulse wave 4 and 5 follow up after the 3rd wave completes. But if the anticipated wave-4 decline is too deep, the market will most likely not end a last 5th wave. Simple as that, and why I advocate for my members to sell into strength/3rd wave upside Fibonacci-target zones and then take a wait-and-see approach. Aggressive traders can then initiate new long positions in the lower target zones of the 4th with well-defined stop losses. Simple as that.

Nine Reasons Why the S&P500 Should Continue to Rally

My preferred method of analyzing the S&P500 (SPX) and other indexes is the Elliott Wave Principle (EWP). Still, its application must coincide with classic technical analyses (TA) to determine the most likely EWP option. Otherwise, one literarily is slapping on wave labels in a vacuum.

S&P 500 Technical Comparison With 2021 Rally

Although “past performance is no guarantee for future results,” as is often disclaimed, in this update, I will look at nine (!) different TA items to see if -as Mark Twain once said- “History Doesn’t Repeat Itself, but It Often Rhymes.” See figure 1 below.

Figure 1. S&P500 daily candlestick charts with several technical indicators and moving averages

The analogy with November 2021 suggests higher prices are ahead.

Since the SPX has now rallied almost 500 points since the February 24 low, I compare the current rally with the one that started in October 2021 and lasted until December 2021. I have numbered similarities between then and now in the Tas with numbers. This method allows for an objective assessment of the price chart:

  1. The Bollinger Bands first expanded (black arrows), then the lower band bottoms bottomed, followed by a move back up, as does the index.
  2. The index is above the (red) 200-day simple moving average (SMA)
  3. The index is above the Ichimoku Cloud
  4. The index is above the (blue) 50-day SMA
  5. The index is above the (green, dotted) 20-day SMA
  6. The index dipped briefly and then rallied again
  7. The RSI5 fell shortly, but not below 50.
  8. The MACD dipped briefly, its histogram topped, but it remained firmly pointing higher
  9. The Money Flow Indicator (MFI14) stayed at around 70.

US Stock Market Technical Forecast

The S&P500 has rallied over 500 points since the infamous February 24 low. An objective analysis of the most recent rally (October-December 2021) shows there are (at least) nine similarities between then and now. Back then, the rally took a brief pause before adding ~4.5%, after which a more significant correction (-5.3%) happened.

The index took a quick break in the middle of last week and has already started to rally again. Similar to the Oct-Dec. ’21 rally. Based on these nine similar TA setups, odds favor the current rally should reach new uptrend highs (think SPX4750+/-50) before a more significant correction (think back to ~SPX4350+/-50) should ensue.

Ethereum’s Counter-trend Rally Finally got Underway: How High Can It Fly?

Price Action Recap

Unfortunately, it has been over a month since I last provided an Elliott Wave Principle (EWP) based update. See here. Hence, whereas my premium crypto trading members have been kept abreast of Ethereum’s (ETH) progress, it is time for a public update. I have been tracking this B-wave/Bounce scenario since at least January, see here, and thus the current price action is not a real surprise. But what has happened since late February?

I was looking for a “b-wave” low between ~$2700-2400 and then a rally to $3615-4310. ETH spiked down to $2302 on February 24 but closed that day at $2598 and is now trading in the $3400s. Thus, although I missed the absolute low by ~$100 (4.2%), the overall path has been filling in nicely. That is the power of the EWP. It is, therefore, suitable to repeat that

correction always consists of at least three Elliott waves: wave-a, wave-b, and wave-c. Sometimes more, but never less. In this case, we are looking at a countertrend rally, i.e., corrective rally/dead cat bounce (black wave-b in Figure 1), of the November through January decline before the next leg lower starts (black wave-c).

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

Technical Analysis

B-waves, B is for (dead cat) Bounce, Should Ideally Target $3680-4230

Figure 1 above shows the daily chart for Ether. There are now enough waves to tell the first and second leg of the countertrend rally are complete (red, intermediate wave-a and -b), and the 3rd leg (red wave-c into the red target zone) is now underway. Namely, as I stated last, “… a break back above $3190 means (red) wave-c to ideally $4230 is underway.” The breakout happened a few days ago, and ETH has already reached the ideal (green) c-wave target zone and the lower end of the ideal red- and black target zones. Thus the recent rally can be considered “good enough,” but the Technical Indicators (TIs) want more. Namely,

  • The Relative Strength Indicator (RSI14) has not been this high since August, September. Back then, ETH experienced a pullback before moving higher.
  • The MACD is firmly pointing high and positive, similar to July-August and October last year.
  • The Money Flow Indicator (MFI14) is very overbought, similar to August last year. Liquidity drives markets higher, but at this stage, it is a bit of a “too much of a good thing”, i.e., everyone has bought ETH. Hence, like the summer of 2020, one should expect a pullback before ETH moves higher again into the ideal red- and black target zones. Think $3700-4000.

Price Forecast

I have anticipated a countertrend rally in ETH since late January to “ideally about $4250+/-250.” I expected this rally to get going earlier, but the market decided to take its sweet time. It happens as I do not control the markets. If anything, this teaches us to remain patient, zoom out and see the forest through the trees. Although my call for a low around $2700-2400 was off by $100, the ensuing rally to $3615-4310 I had anticipated has now come to fruition. Shorter-term, the EWP count and technical indicators suggest ETH should take a breather before moving higher again as long as $3065 holds as support.

Bitcoin’s Counter-trend Rally Is Underway: How High Can It Fly?

Bitcoin Technical Analysis

It has been four weeks since I shared an Elliott Wave Principle (EWP) based update on Bitcoin (BTC). See here. Although BTC broke below $40K, it did not reach as low as $28100-31760 as I thought it would but bottomed at $37191 instead, showing one cannot forecast every move correctly.

However, this meant the mother of all cryptos would be stuck between $34.3 and $44.3K for an extended period, as I pointed out here. I then showed that a breakout above $44.3K would -based on a simple symmetry- target around $54.3K. The breakout happened on Saturday, March 26, and BTC already traded as high as $48K+.

Since sideways markets can last for as long as they want, patience in this game remains critical. Or, as famous investor Warren Buffett said, “The stock market is a device for transferring money from the impatient to the patient.” The same goes for cryptocurrencies. However, I digress, and now that the breakout is finally underway, it is time to update the EWP.

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

Wave-B (B is for Bounce) Is Now Underway

In early March and before that, I was convinced “the more significant B-wave bounce I anticipated appears still to be on track.” BTC took its sweet time to get going, but now that it is underway, we can start adjusting the upside targets if necessary.

The symmetry breakout target is ~$54.3K. When I then add two layers of wave extensions (red and black waves “c?”, as well as the typical retrace zone for a B-wave aka “bounce” (blue 50-76.4%) I find that the red 161.80% Fibonacci extension, the black 161.80% Fib-extension and the blue 61.80% retrace all cluster around the $55,000+/-500 level.

Thus, four different “fingers” all point to the same level, which is such a strong confluence that I expect BTC to reach that level. Besides, when I analyze the technical indicators (TIs), I find that

  • The daily RSI5 is very high (currently at 91): BTC is overbought and vulnerable to a pullback, but the current breakout rally is vital and should continue after the correction.
  • The daily MACD points higher. It gave a “buy cross” mid-March and is now in positive territory (above 0).
  • The Money Flow Indicator (MFI14) is robust, with a +90 reading: BTC’s price is overbought and vulnerable to a pullback, but it also means that a lot of liquidity flows into the cryptocurrency, and liquidity drives markets. Compare now to early August and mid-October last year and how BTC behaved back then.

Bottom line

BTC has been going sideways for most of the year and finally broke out. I continued to update my premium crypto trading members to remain patient and wait. For those who can’t wait that long, please know my Crypto-Trading-Alert already went long BTC on March 16. Regardless, I remained steadfast in my call for more upside if BTC would hold $34.3K.

The simple symmetry breakout target, two different wave-degree Fibonacci extensions, and typical Fibonacci-retrace levels for a B-wave bounce coincide at around $55,000+/-500. Besides, all the technical indicators are long and strong, suggesting higher prices. However, the TIs are getting overbought, and a short-term pullback to ideally the breakout level of ~$44.3K before the rally continues should not come as a surprise.

The S&P500 Melt-Up to 5500+ Is Still on Track.

S&P 500 Technical Analysis

A little over a week ago, see here, I found using the Elliott Wave Principle (EWP), the S&P500 (SPX) should

ideally top around SPX4500+/10, then back down to SPX4430+/-10, and …. top out around SPX4700+/-50 for (red) intermediate-i before a multi-day/week correction kicks in: wave-ii. See Figure 1 below.

The index topped at SPX4522, dropped to SPX4456, and is now trading at SPX4540, which is about 1.8% higher than when my last update was posted, thus supporting my Bullish thesis.

Besides, my short-term upside and downside targets were only off by ~0.3% showing the accuracy of the Fibonacci-based Elliott wave I used, and my premium major market members put it to good use. Indeed, I fit my opinion to the market and not the other way around because that is a futile exercise resulting in financial ruin.

Figure 1. S&P500 daily candlestick charts with detailed EWP count

Rally to SPX4700 should see a few minor pullbacks (4th and 5th waves)

So how are things progressing? Figure 1 above shows that (green) minor-3 is about complete because the index has reached the ideal target zone. It can still try for the 161.80% Fib-extension at SPX4600+/-10, but it is not necessary because there are enough smaller waves to consider wave-3 complete.

A short-term pullback to the wave-4 target zone at SPX4430-4490 should commence soon. Upper end preferred, from where wave-5 can rally to ideally SPX4640-4700. This Bullish thesis will come under pressure if the pullback moves below SPX4385 with a severe warning below SPX4430.

Bottom line

The S&P500 topped and bottomed, short-term, within 0.3% of my ideal upside and downside target zones, and should now be wrapping up a minor 3rd wave. A multi-day 4th wave down to ideally SPX4490-4430 should commence soon before the index can rally to SPX4640-4700. I still expect a 200-400 correction from those levels before the rally to 5500+ gets going in all earnest.

My Bullish thesis will come under pressure if the multi-day 4th wave pullback moves below SPX4385 with a severe warning below SPX4430. Thus overall, the S&P500 is still progressing in a highly predictable impulsive manner, and I continue to expect this. Knowing the most likely path forward short- to long-term is tremendously advantageous because there will be very few real surprises.

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

Is the Short-term Chart for Bitcoin Bullish or Bearish?

See Figure 1 below. Here I plotted about six months’ worth of daily candles with several important technical indicators (TIs):

  • A Relative Strength Indicator: The RSI5
  • Three simple moving averages: 20-day (dotted green), 50-day (blue), and 200-day (red)
  • The Bollinger Bands: solid green
  • The Ichimoku cloud: see here, aka “The Cloud”.
  • The Moving Average Convergence/Divergence: MACD
  • Money Flow Indicator: MFI14

Albeit there are many more TIs, these six are my bread-n-butter indicators to help assess the cryptocurrency’s most likely trend. Let’s work our way down.

Figure 1. Bitcoin daily chart with technical indicators

  • The RSI5 is currently <70 and except for early March it not been able to move and stay above that level for long. Thus, it signals weakness. Bulls 0, Bears 1.
  • BTC is below its 200d SMA, but above its 20d and 50d. Thus it is technically in an intermediate-term uptrend but in a long-term downtrend. It will have to close above the former to re-establish a new Bullish uptrend. Compare now with October-December 2020, for example. Bulls 1, Bears 1.
  • The crypto is above “The Cloud.” When it is above it, good times tend to happen. Compare now with October-November 2020, for example. Bulls 1, Bears 0
  • The MACD is on a buy and is trending higher, albeit slowly, and with price not making much progress over the past several weeks, momentum indicators can be misleading. Regardless up is up, and buy signal is a buy signal. Bulls 1, Bears 0.
  • Money is flowing back into BTC, but not at a strong clip. It is not even above 80, like in October last year. Bulls 0, Bears 1.
  • Price is at the upper Bollinger band, but the bands are not expanding which would indicate a stronger uptrend. If/when BTC does “ride the band” like October last year, the Bulls will be in charge. Until then it is a neither/nor set up: Bulls 1, Bears 1.

Bottom line: the chart is currently neutral.

The overall cumulative verdict based on these TIs is Bulls 4 vs. Bears 4. Thus, the current price chart for Bitcoin is neutral based on these simple but effective TIs. A breakout above $45K is needed to give the Bulls the edge to target the 200d SMA and possibly $54K. However, a fall back below the 50d SMA and the cloud, can target the low-30Ks once again and possibly as low as $24K. Thus, the Bulls and the Bears will continue to slug it out on the trading floor, social media, blogs, and comments sections. But ultimately, the chart will tell us who the winner will be so watch the breakout vs breakdown.

Is the Short-term Chart for Ethereum Bullish or Bearish?

See Figure 1 below. Here I plotted about six months’ worth of daily candles with several important technical indicators (TIs):

  • A Relative Strength Indicator: The RSI5
  • Three simple moving averages: 20-day (dotted green), 50-day (blue), and 200-day (red)
  • The Bollinger Bands: solid green
  • The Ichimoku cloud: see here, aka “The Cloud”.
  • The Moving Average Convergence/Divergence: MACD
  • Money Flow Indicator: MFI14

I also included a trend line (purple), which is not as objective as TIs, but certainly useful. Albeit there are many more TIs, these six are my bread-n-butter indicators to help assess the cryptocurrency’s most likely trend. Let’s work our way down.

Figure 1. Ethereum daily chart with technical indicators

  • The RSI5 is currently <70, but has been trying to stay above it recently. Regardless, it has clearly not stayed above that level for long. Thus, it signals weakness. Bulls 0, Bears 1.
  • ETH is below its 200d SMA, but above its 20d and 50d. Thus it is technically in an intermediate-term uptrend but in a long-term downtrend. It will have to close above the former to re-establish a new Bullish uptrend. Compare now with October-December 2020, for example. Bulls 1, Bears 1.
  • The crypto is in “The Cloud.” When it is above it, good times tend to happen, but when it is below it expect lower prices. Compare now with October-November 2020, end since December 2020 for example, respectively. Bulls 0, Bears 1.
  • The MACD is on a buy and is trending higher, albeit slowly, and with price not making much progress over the past several weeks, momentum indicators can be misleading. Regardless up is up, and buy signal is a buy signal. Bulls 1, Bears 0.
  • Money is flowing back into ETH, but not at a strong clip. It is not even above 80, like in early October last year. Bulls 0, Bears 1.
  • Price is at the upper Bollinger band, and the bands are expanding slightly which indicates strength. But ETH will have to “ride the band” like in October-November last year to signal the Bulls are in charge. Until then it is a neither/nor set up: Bulls 1, Bears 0.

Lastly, Ethereum did break out above the (purple) downtrend line that has held all the upside in check this year so far. The ascending shorter arrows show the upside potential the breakout has based on the fact ETH bottomed three times this year at around $2435, excluding the less important intraday wicks. The upside target is in this case around the 200d SMA: $3500. Bulls 1, Bears 0

Bottom line: the chart is currently neutral

The overall cumulative verdict based on these TIs and trendline breakout is Bulls 4 vs. Bears 4. Thus, the current price chart for Ethereum is neutral based on this simple but effective tally. A breakout above “The Cloud” at around $3040 is needed to give the Bulls the edge to target the 200d SMA. However, a fall below “The Cloud” and the 20d SMA, can target the 2300s once again. Thus, the Bulls and the Bears will continue to slug it out on the trading floor, social media, blogs, and comments sections. But ultimately, the chart will tell us who the winner will be so watch the breakout vs breakdown.

What Will it Take for the S&P500 Chart to Turn Bullish?

  • A Relative Strength Indicator: The RSI5
  • Two simple moving averages: 50-day (blue) and 200-day (red)
  • The Ichimoku cloud: see here, aka “The Cloud”.
  • The Moving Average Convergence/Divergence: MACD
  • Money Flow Indicator: MFI14

Albeit there are many more TIs, these five are my bread-n-butter indicators to help assess the index’s most likely trend. Let’s work our way down.

Figure 1. S&P500 daily chart with technical indicators

  • The RSI5 is currently at >75 and has not been this high since the correction started from the January 4 all-time high (ATH). Thus, it signals a change in trend. Bulls 1, Bears 0.
  • The index is below its 50d and 200d SMA. It will have to close above these two SMAs to re-establish a new uptrend. Compare now with October-December 2020, for example. Bulls 0, Bears 1.
  • The index is below “The Cloud.” It must close back above it (SPX4625 to signal a new uptrend). Compare now with October-December 2020, for example. Bulls 0, Bears 1
  • The MACD is on a buy and is now at higher levels than during the correction period, suggesting a new phase has started (just a bounce or new uptrend?!): Bulls 1, Bears 0.
  • Money is flowing back into stocks, and the indicator made a higher low late-February into early-March compared to late-January. But, it will have to break above the mid-February levels to signal a change in trend. Bulls 1, Bears 1.

Bottom line: the chart is currently neutral.

The overall cumulative verdict based on these TIs is Bulls 3 vs. Bears 3. Thus, although there are many other positive developments, such as in market breadth (see my Tweet here), the current price chart for the S&P500 is neutral based on these simple but effective TIs. A breakout above the SMAs and “The Cloud” is needed to give the Bulls the edge. The Bulls and the Bears will continue to slug it out on the trading floor, social media, blogs, and comments sections. But ultimately, the chart will tell us who the winner will be.