It seems like it was months ago that Ethereum' went on its epic bull run, but it has only been a couple weeks. On January 17th we posted that we expected a pullback in Ethereum', and though many thought we were crazy at that time, it happened but only for a brief moment. I surely covered my sells and added a little, but did not add a full position as I did think we would fall further. Well expect the unexpected as they say. Clearly with Bitcoin starting to gain some traction, trading just above its longer term trend line, and alt coins starting to also show bullish momentum, what are we looking for with Ethereum' and is still following Bitcoin's Rally pattern in October?
Charts: On the chart above we have resisted the longer term trend where we have found buyers. As I believe this will play out as a "V" shape correction and we have already broken the down trend, I think it is not long before we rally. So I am adding a second position here which overall provides a cost average below our shaving points back before the pullback.
When we first threw up the first chart below, we got hammered by the perma-bulls. I remember the comments "We will never see below $1000 again" from numerous bloggers. Here's your sentiment signal! Shave off and move over. We did just that and the pattern unfolded like we thought it might and were able to cover.
Looking at the second chart below we have updated the chart and though and though the names have changed, the pattern is still in tact. So using this same pattern can we gain any insight to the future trend for Ethereum'?
First I drew the extension on bitcoin for which resulted in the final blow off top which happened just above the 2.618 extension level. I also looked at the 4.23 corrective retracement levels which we found resistance on both the upswing and downswing off the peak. Looking at presumptive levels on Ethereum' if we follow the same pattern and trend that puts us at the $3600-$4000 level. I've also added a trading level along the way as I like how the levels line up but will wait for a final breakout before trading this.
Sentiment: As I stated on the bitcoin article this morning, market sentiment is starting to shift. We see that in the "mini" alt market where buyers are starting to come in on several of the better "mini alts". EOS' and other more blue chip "mini's" have been showing resilience through this down turn, though not escaping the volatility swings entirely. Makes for good bargain hunting which is why we like to have cash on deck.
Bottom line the sun is starting to come out, the waters are starting to calm, which means beach goers will soon be headed for the beach. I'm looking to add to some solid alts, but will do so cautiously as the storm clouds are just beginning to subside. I want to be early enough to get a picnic table, but not too early that I'm setting up in the rain.
Again these markets are thin and shorting is limited, therefore the only way to really short is by selling out your long position. These types of short markets exhaust quickly as it is usually the retail buyer that is scared out of the market and exits on any signal of weakness. Until other products evolve allowing traders to short markets longer term, these corrections will likely be short lived for now. However, as we are starting the 5th wave in a longer term cycle (in my opinion) I want to emphasize caution. 5th waves end quickly and this is where traders can get destroyed and profits dissolved to dust. I want to be in for the final run, but we need to be looking for an exit door early, before the crowd realizes the concert is over!
Goldbug, I think your overly bullish this time. But lets see how it works out. ;)
dariushmaatoon007
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@TheCryptAlpha, it happened for all traders in this market but i think he is right and his idea is solid as rock
TheCryptAlpha
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@dariushmaatoon007, Time frame is incorrect. But its possible in the long run.
cheretic
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Hi Goldbug, Thankyou for your continued commentary, you have helped me a lot so far. Would you mind showing me you long term count and why you think we will be entering a wave 5? My long term weekly count has us as already doing it on a log scale chart. Waves 2 and 4 were both .618 retracements.
RustyRue
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Great metaphor of the picnic table! :D
CryptoBlueMoon
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wow that would be awesome :)
2018 will be year of Ethereum and Raiblocks!
@goldbug1 Good work as always !! Would you consider a fifth wave yet to come or it's already invalidated after the 4th.
Maroochydore
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Always like your posts.
So long as the logic is "all cats have 4 legs so anything with 4 legs must be a cat". I appreciate patterns can be found and I'm not outright trashing the call (I don't have enough experience here) but though it would be nice (and I too have been patiently waiting for this breakout), maybe to say "like Bitcoin" is a bit much. Happy to be proved wrong!
I'm also thinking that it might be a double top before a pull back, the price rise if ETH seemed to have no basis behind it other than "Oh well it's been a while, let's go!", but it's issues are plenty and unresolved so I think half an eye on the door is a good thing.
Also if BTC starts to kick in, that will suck all the funds from everyone else so there are lots of factors here.