Ethereum: Will the Irregular Flat Correction End Soon?
Dr. Arnout ter Schure | Aug 09, 2023 20:40
In July, see here, we found using the Elliott Wave Principle (EWP), for the “queen of cryptos” Ethereum:
“ETH’s strong rally last Thursday, [July 13], only to be erased a few days later, smells, per the EWP-“olfactory test” like a B-wave. This means red W-ii/b is most likely becoming an irregular flat: green W-a, -b, and -c from the red W-i/a high with an ideal target zone of $1775-1875 depending on the relationship between W-a and W-c (c=a to c=1.618x a).
Since then, ETH has moved slowly lower, only losing ~5% of its value, and has done so in an overlapping, and thus corrective, fashion. The decline since the July 13 high is likely morphing into an ending diagonal (green) W-c of the red W-ii. See Figure 1 below.
- Figure 1. The hourly chart of ETH with several technical indicators
In fact, so strong that ETH’s price moved outside the upper (dotted) trend line which has held all upside in check since the July 13 top. Thus, a significant development from key price levels. Besides, almost two months later, ETH is still on track and behaving as anticipated. It is simply taking its time to correct the brief June-July rally. But that is not a surprise.
Namely, from a timing perspective, we can observe ETH rallied impulsively from March 10 to April 14: blue dotted lines in Figure 2 below. It took about 1.5x as long to correct between ~62% of that rally: black box near 3rd blue dotted line. Applying a similar analogy, the current correction measured from the July 3rd impulse high has now lasted twice as long as the preceding impulsive rally: red dotted lines.
- Figure 2. The hourly chart of ETH with several technical indicators
Back in July, we already knew:
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Join the millions of people who stay on top of global financial markets with Investing.com.Download Now“[ETH would] have to drop below the June low [at $1622], with a first warning for the Bulls below the lower end of support ($1750) to nullify our overall Bullish thesis. And we “would let ETH decide how it wants to fill in the short term, while we keep an eye on higher prices over the longer term.”
Fast forward, and ETH decided to “trickle” overlappingly lower: no harm has been done to our Bullish thesis yet. In contrast, the additional price data and our timing analyses now allowed us to specify our downside target zones and remain patient, as corrections tend to last longer than preceding rallies.
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