Last week, in my first update on Cardano (ADA), I looked for the cryptocurrency, which will soon be peaking and “dropping to ideally USD 2.25-2.55 to ideally USD 3.25-3.75 before the next rally. From there, I expect an even bigger correction. ”Fast forward, and ADA peaked on the same day and hit $ 2.47 and $ 2.50 three and four days later, respectively, and bounced back to $ 2.95 . Thus, the Elliott Wave Principle (EWP) combined with Technical Analysis (TA) has indeed been a reliable and accurate way to predict recent highs and lows. The question now is whether the correction is over?
Figure 1. ETH daily chart with EWP count and technical indicators.
Fourth waves are often very complex
Last week I showed: “Thanks to the EWP, we know for sure that after wave 3 there will be a 4th and 5th wave.” In this case (red) intermediate waves-iii, iv and v. See Figure 1 above. The decline of last week to the 23.60% retraction of wave-iii is technically sufficient for a correction of the 4th wave. Corrections always consist of at least three waves (a, b, c), and corrections of the 4th wave are often – in EWP terms – flat corrections, triangles or any combination thereof. Look here.
So the question is, was last week’s low of $ 2.47 all of (red) wave-iv or just (green) wave-a of wave-iv? See Figure 1 above. At this point, I can’t say for sure which of the two options it is, but given EWP’s knowledge that corrections of the 4th wave are often quite complex and longer lasting, I prefer the latter option. In this case, wave-b is now underway, which can target up to 2.97-3.17 USD for an “irregular flat” before (green) wave-c of (red) wave-iv brings the price back down brings back into the ideal target zone of 2.50-2.20 USD.
Alternatively, ADA has to go above $ 3.17 to let me know that Wave-iv is complete because the B-wave of an irregular apartment above that price level would be too long according to EWP guidelines. In that case, I’ll be looking for ADA to potentially get up to $ 4.50 +/- $ 0.25. But it does mean last week’s low of $ 2.47 must be held into the future or the “dreaded” and preferred ongoing fourth wave will be in play.
The story goes on
Conclusion: IMHO Cardano (ADA) has completed its “more important 3rd wave” and embarked[ed] with a correction to ideally around USD 2.25-2.55, depending on where the third wave peaks. ”as expected last week. The correction has already reached the ideal target zone, which – as I said last week – “IMHO was another buying opportunity for swing traders, as long as ADA does not fall below USD 1.87.” The cryptocurrency would likely want to revisit this zone for a more complex correction, but a breakout above $ 3.17 means it can aim for $ 4.50 +/- $ 0.25 because “after three comes four and five, we know that for sure ”.
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This article was originally published on FX Empire