Ethereum: Pay Me Now or Pay Me Later?

Ethereum Topped Exactly Where We Thought It Would

At the end of June, see here, we found using the Elliott Wave Principle (EWP), Ethereum (ETH) was developing an almost picture-perfect Fibonacci-based impulse pattern, and

“… as long as … $1838 holds, we can allow Ethereum to reach, ideally, $1945-1975. … . We should then look for a retrace to around $1770+/-25 before the next more significant rally takes place, which can propel ETH to as high as $2300+. Thus, even a rally to $1945+ will be followed by a … retrace and a … rally.”

The cryptocurrency reached $1976 on July 3^rd, dropped to $1826 on July 7, and rallied again last Thursday to as high as $2013 only to be trading today at $1880s again. See Figure 1 below. Thus, indeed, the cryptocurrency topped exactly as forecasted and dropped as expected. But the recent rally and subsequent drop throws a small, short-term wrench in our overall Bullish thesis.

Irregular Flat vs. Impulse

Namely, since the $1976 high, ETH has been correcting. Corrections are either a zigzag, a triangle, or a flat, so the question is “What correction is Ethereum in?” ETH’s strong rally last Thursday, only to be erased a few days later, smells, per the EWP-“olfactory test” like a B-wave, as shown in Figure 1 above. 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 (see here) 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).

The alternative is shown in Figure 2 below, where the crypto is already in the (orange) W-1, 2 setup. But for that pattern to hold, ETH cannot move below the (red) “floor” level at $1923 and it will have to break above $2025 rather directly.

Regardless, thanks to the EWP, we know that even if the irregular flat targets (slightly) lower prices first, it will be followed by another impulse higher targeting >$2300, with a first pitstop at ideally around $2050-2100. Thus, for now we can let ETH decide how it wants to fill in the short term, with a preference for the irregular flat, while we keep an eye on higher prices over the longer term.

The cryptocurrency will have to drop below the June low, with a first warning for the Bulls below $1750 to nullify our overall Bullish thesis.