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Is Ethereum Currently in a Corrective Phase? Where to Next?

Published 02/02/2024, 17:32
Updated 09/07/2023, 11:31

Ethereum (ETHUSD) topped on January 12 at $2717, a day after Bitcoin topped on the approval of spot Bitcoin exchange-traded funds (BTC-ETFs). A classic “buy the rumor, sell the news” event? Since then, ETHUSD has moved lower quickly, bottomed out at $2165 on January 23, a 20% drop, and has since recovered some of its losses. Because we can count five waves up (orange 1, 2, 3, 4, 5) from the low struck October 2023 to the January high, we should expect three waves (orange a-b-c) lower to correct that rally before ETHUSD can move higher again: See Figure 1 below.

Figure 1. The daily resolution candlestick chart of ETH with several technical indicators

ETH Chart

In our previous update, see here, we found

Moreover, ETHUSD is still above its rising (blue) 50-day simple moving average (50d SMA) since the rally from the October 2023 low started. Thus, we continue to have our parameters in place [for a larger correction].

1. A daily close below the 50d SMA … followed by,

2. A daily close below $2135.

Since ETHUSD has broken below its 50d SMA, although not yet below $2135, we assign the following Elliott Wave Principle (EWP) count to ETHUSD.

  • The January 23 low was orange W-a of grey W-ii.
  • Price is currently in orange W-b to ideally $2450.
  • Once reached, ETHUSD should ideally correct for orange W-c of W-ii to ~$1950.

Our contingencies are as follows.

  • If ETHUSD moves below the January 23 without reaching ~$2450, first, we must consider the orange W-b already complete at the January 30 high of $2391.
  • If ETHUSD continues to rally and breaks out above the January 12 high without going below the January 23 low, the grey W-iii is already underway to at least $4400.

We cannot predict the future, but with the EWP, we know above or below which price levels, specific patterns, and paths become operable. Moreover, if we are correct, ETHUSD is currently in a corrective phase: the dreaded B-wave. These are the hardest to forecast, so we must watch the aforementioned price levels closely to know where we are in the EWP.

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