Ongoing Correction Within Underlying Bull Trend

Macro vs Technicals

This was one of the lowest volatility weeks we have seen this year, considering the Federal Reserve (Fed) and European Central Bank (ECB) raised rates. While the Fed shifted a little more to being data dependent, the ECB retained a far more hawkish stance. This was followed by a surprisingly strong US employment report. Next week, we get an inflation update from the US and the Bank of England (BoE) – who are also expected to raise rates. Considering US rates and equities look set to remain in corrective ranges, this supports the Elliott Wave and technical structures looking for the same in crypto. 

Ethereum vs Bitcoin

After holding and reacting higher from Fibonacci support around 0.062, my studies are looking for a return to the previous range. As such, we look to have developed a higher low around 0.064 in the last week and should now see the spread work higher to 0.075-0.078 range highs. A break of pivot resistance around 0.067 and then trend resistance at 0.069 triggers that next leg higher. 

This outlook is wrong on a break of 0.064 and then 0.062, such a move opening 0.057.  

Bitcoin

No change. Prices remain in a correction phase after the spike up to ~31,000. So far, the pullback has held over the previous fourth wave and Fibonacci support in the 26,645 region. We remain faced with two options. We either remain in a choppy range between that support and the highs for a while (a triangle) and then break higher to next resistance in the 33,000 region, or we break that support and see a deeper correction back towards 25,400 weekly support before we should look for signs of a higher low. It is hard to tell which correction phase will play out at this stage.

A decline and close below 25,400 would suggest 31,000 was a more significant peak than my studies currently suggest and risks a broader pullback towards 19,500 again. 

Longer-term, my studies suggest the bear cycle from the 2021 highs completed last year around 15,500.

First targets and resistance in the bull move lies in the 33,000 region. But the main target is 36,000, that being Fibonacci and the head and shoulders projection. I suspect we see that region hold on the first test, but ultra long-term targets are 42,000-48,000. A decline back through 19,500 would negate and signal the whole move up to around 30,000 has just been a 3-wave correction process and we are likely to remain in a side and choppy range between 15,000 and 30,000 for a number of months.

Ethereum

The coming week will be important in determining whether we just run back into the bull trend or see a deeper corrective pullback. My studies suggest the latter after the reversal from 2146 arguably developed in five-waves to 1788. Since then, we have been a corrective bounce, which looks set to test up to the 2006-2065 region in wave c and where we should develop a lower higher.

We should then witness a move down to the 1714-1660 support region to complete the correction from the highs. We should then see a return to the underlying bull trend. If prices race up through 2065, it would set off the first alarm bell that the outlook is wrong and through 2149 negates and signals we are back in trend towards the longer-term targets. 

Longer-term, the reversal from last year’s lows targets ~2400/2450 resistance, but through there can extend towards 3000-3300. A decline back through 1400 negating this underlying bullish outlook, signalling the gains have just been another three-wave correction and keeping us in a wide but lower choppy range.

Robin is a global market veteran, with over 30 years of experience on the sell and buy-side, as a strategist and trader. He now provides strategic trading and investing advice to hedge funds, family offices, HNW individuals and trading desks around the globe.

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(The commentary contained in the above article does not constitute an offer or a solicitation, or a recommendation to implement or liquidate an investment or to carry out any other transaction. It should not be used as a basis for any investment decision or other decision. Any investment decision should be based on appropriate professional advice specific to your needs.)