Ethereum has recently bounced higher from its low of 167 from Sept 12. Since then, the price has been moving a bit lower, but is it going to test the low further or take it out for another leg down?
Well based on my Elliott wave analysis, I believe that the price for Ethereum is going to hold and we are most likely at a swing low point. I expect prices should move higher from the current level to test the nearest important resistance around the 320 handle. Let’s dissect the price action of Ethereum to better understand how I have come to that conclusion.
Below is the daily chart of ETH/USD:
Since the mid part of July, the price of Ethereum has moved down sharply. The high of 515 was reached at that time and since then has fallen to as low as 167.
If you take a closer look at the chart above, you will notice that there is a clear Elliott Wave pattern appearing on the chart.
Wave 1 was followed by a deep wave 2 retracement. This is typical and is usually followed by a strong wave 3. Wave 3 will usually have the highest volatility within its structure. We can see this from the many large down candles during that leg. This validates our assumption that this price move is most likely our wave 3.
After a bit of consolidation that followed, , a contacting triangle formation began to emerge on the price chart. This is denoted with a-b-c-d-e, which marked the end of wave 4. This final leg down would be wave 5 as shown on the chart.
After every 5 wave sequence we would expect a correction. The most common type of correction that occurs is an A-B-C zig zag formation. As you will notice from the price chart, it appears that wave A and B have completed. This leaves us at the current moment in time. I expect price to move higher from here in a Wave C up direction to complete the entire 5-3 sequence. The most likely price target for the end of wave C will be the 320 handle. This area marks the most important near term resistance level to the upside.
This analysis was done by Vic Patel. He is a professional cryptocurrency and foreign exchange trader. He is also the founder of Forex Training Group, a popular educational blog for traders.