Ethereum: Will The Correction End Soon?

Ending Diagonals Are Tricky

In July, see here, we found using the Elliott Wave Principle (EWP), for the “queen of cryptos” Ethereum (ETH)

“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 (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).

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.

Diagonals are overlapping five-wave price patterns, and ETH may now also have completed the grey W-v—the last wave of the green W-c. The ideal (green) target zone is between $1785-1825, which fits well with the “1770+/-25” zone we already forecasted in June. Moreover, ETH’s price tagged the (red) 50% retrace, which is quite common for a 2^nd wave (red W-ii), and reacted strongly.

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.

Correction In Time May Have Ended

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 3^rd blue dotted line. Applying a similar analogy, the current correction measured from the July 3^rd impulse-high has now lasted twice as long as the preceding impulsive rally: red dotted lines.

Back in July, we already knew “[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.