Last week, in my first update on Cardano (ADA), I was looking for the cryptocurrency to top out soon and fall back “to ideally $2.25-2.55 before the next rally to ideally $3.25-3.75. From there, I then expect an even more significant correction”. Fast forward, and ADA topped that same day and reached $2.47 and $2.50 three and four days later, respectively, and rallied back to the $2.95. Thus, the Elliott Wave Principle (EWP) combined with Technical Analyses (TA) was indeed a reliable and accurate method to forecast the recent highs and lows. The question now is, if the correction is already over?
Figure 1. ETH daily chart with EWP count and technical indicators.
Fourth waves are often very complex
Last week I showed that “thanks to the EWP, we know with certainty that after wave 3 comes a 4th and 5th wave.” In this case (red) intermediate waves-iii, iv, and v. See Figure 1 above. Last week’s drop to the 23.60% retrace of wave-iii is technically enough for a 4th wave correction. Corrections always comprise of at least three waves (a, b, c), and 4th wave corrections often become -in EWP-terms- flat corrections, triangles, or any combination thereof. See here.
Thus the question is if last week’s $2.47 low was all off (red) wave-iv or only (green) wave-a of wave-iv? See Figure 1 above. At his stage, I cannot tell with certainty which of the two options it is but based on the EWP knowledge that 4th wave corrections are often rather complex and longer-lasting, I prefer the latter option. In that case, wave-b is now underway, which can target as high as $2.97-3.17 for what would then become an “irregular flat,” before (green) wave-c of (red) wave-iv brings the price back down to the ideal target zone of $2.50-2.20 once again.
Alternatively, ADA will have to rally above $3.17 to tell me wave-iv is complete because, above that price level, the b-wave of an irregular flat would be too long, according to the EWP guidelines. In that case, I will look for ADA to possibly reach as high as $4.50+/-0.25. But it will mean last week’s $2.47 low will have to hold going forward, or else the “dreaded” and favored continued 4th wave is in play.
Bottom line: Cardano (ADA) completed IMHO its “more significant 3rd wave and embark[ed] on a correction to ideally around $2.25-2.55, depending on where the 3rd wave will top.” as anticipated last week. The correction already reached the ideal target zone, which was -as said last week- “IMHO another buying opportunity for swing traders as long as ADA does not break below $1.87.” The cryptocurrency would likely want to revisit this zone once again for a more complex correction, but a break out above $3.17 will mean it can target $4.50+/-0.25 because “after three comes four and five, that we know for certain.”
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This article was originally posted on FX Empire
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