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.
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).