I primarily use the Elliott Wave Principle (EWP) to forecast Ethereum’s (ETHUSD) price swings. Now that the cryptocurrency has lost >82% of its All-time-high (ATH) value let’s assess how good a tool the EWP is when applied correctly.
Ethereum Elliott Wave Analysis
- In early December of last year (!), see here, I warned, “The Bulls’ most likely hope now rests on an ending diagonal pattern targeting $5500-5900. But if $3575 is breached again, then a more prolonged Bear market has to be considered.” That level gave way in early January of this year, ushering in the current Bear market.
- In late January, I was then looking for a (B-wave) bounce to ideally $4250+/-250 (see here) because “How high the B-wave will travel cannot be known with certainty beforehand, but a 50% retrace of the previous A-wave decline is a reasonable “middle-of-the-road” estimate.”. All we got was $3580 in early April. Around that time, see here, I warned based on the available data, “A drop below $3000 will be the first sign $4000 may not be reached, and a retest of the low-2000s should then be expected.”
- Lastly, in mid-May, see here, I found -again- based on the available price data, “Thus, when wave-iv is complete, ETH should do one last stab lower for wave-v to ideally ~$1500+/-100.”
I am aware ETH traded as low as $875 over the weekend and has rallied 36% since, but I think you get the point: The EWP can forecast every directional price move very well using simple if/then scenarios. In this case, “if ETH breaks below X, then it will move down to Y.” As the smaller waves unfold, more price data becomes available, and one can fine-tune the target zones.
See figure 1 below, where I show the anticipated path outlined in January with black dotted arrows vs. the actual course with red dotted arrows. Indeed, the devil is in the details, as one cannot forecast every twist and turn months or weeks ahead of time, but the overall path has been captured very well. EWP 1. Opinions 0.
Figure 1. Ethereum weekly charts with detailed EWP count and technical indicators.
Getting very close to a low?
So far, ETH has only done three waves lower from its ATH: black major a, b, and c. That means the price action has been corrective. Moreover, although I initially anticipated a shorter c-wave that would find support around the June-July lows from last year, and hence my initial “low-2000s and the 1500 +/-100” target zones, the c-wave has now come within spitting distance of the ideal c=a level at $855.
Albeit not shown here, the short-term EWP count suggests ETH could do one last wave-5 of v of c of IV lower to that level, but as I always say, “do not bank on 5th of 5th waves.”. Thus the long-term downside risk vs. upside reward has, IMHO, now considerably shifted towards reward, as I also pointed out to my premium crypto trading members in my recent webcast (see here).
Thus bigger picture-wise, we now have a clear set of parameters/if-then scenarios. If ETH can stay above $855 and rally back above the January lows and ultimately the April high, then it has the potential to reach $10K+ over the next several years. But if ETH continues to fall, $300-500 could easily be next.
Given how well my EWP-based work has been able to forecast where ETH should subsequently bottom, top, and bottom, I prefer the Bullish scenario. Either way, we are now prepared. Forewarned is forearmed.