I say “mostly” because I did not get it right all the time, which is, of course, impossible when one is trying to forecast a non-linear, stochastic environment. And I will be first to admit “I am wrong till proven right,” as that allows for a humble, objective approach to improve my forecasting accuracy and reliability for my premium crypto members. But, as you may recall, $2775+/-100, $2700-2855 more specifically, was my next intermediate-term upside target for ETH for quite some time, and this week it has been reached.
So what is next?
Not shown here, but the daily chart for ETH strongly suggests it is wrapping up some tiny 4th and 5th EWP waves to complete the more significant (black) major-3 wave, as shown in Figure 1 below.
Figure 1. ETH monthly EWP count and technical indicators.
The monthly chart above tells what the big-picture, long-term trend, and EWP count is. ETH is in a solid Bull market as it is well above its ascending 10-month, 20-month, and 50-month Simple Moving Averages (SMA), with the 10>20>50. A 100% Bullish setup. In addition, the monthly Relative Strength Indicator (RSI5) is at almost 99, showing how strong the current uptrend is as the maximum possible reading is 100.
The summer of 2017 had similarly high monthly RSI5 readings (red box): 99.18 and 99.38, respectively. ETH peaked in June 2017 at $417.21, dropped to $132.64 in July 2017, followed by a rally to $1422.86 in January 2018. A 68% correction, followed by 970% gain. Quite impressive numbers. Back then, ETH completed blue Primary III, IV, and V of pink Cycle wave-1, respectively. Therefore, the instrument is in a similar wave setup now, albeit at different degrees: currently completing Major wave-3 of Primary-III. The current maxed out RSI5 reading supports this notion as 3rd of 3rd waves are the most substantial waves. Given the near-vertical ascend of ETH over the past six months, it is pretty obvious we are dealing with such a wave, and the 2017 analogy tells us we should expect a pretty decent correction soon: wave-4.
Typically 4th waves retrace between 23.60-38.20% of the initial 3rd wave but can extend to the 50% retrace. If anything, 2017 showed us it could even be more. The black box in Figure 1 shows the standard, textbook, target zone for this pending wave-4. Besides, horizontal support resides at $1900-2000 and $1300-1500. The latter area would “only” be a 55% decline for ETH and still fit well with the 2017 correction. An almost 1000% advance, even from those levels, would target the low- to mid-ten thousands. But for now, let’s focus on the pending decline, as extreme wave extensions cannot be forecasted and thus not guaranteed.
Bottom line: The anticipated rally to the ideal target zone of $2700-2855 has been accomplished. Although wave-extensions, i.e., even slightly higher prices, can not be excluded, I now expect a multi-week decline back to at least around $1900-2000, but ideally $1400+/-100. The latter would be an almost 50% haircut, which is not uncommon before ETH is ready to stage its next multi-month rally. A move and close below this week’s low at $2088 from current levels or slightly higher will signal this deep correction is underway.