ETHUSD growth from ETHBTC history. Have we completed wave 3?
Updated
Since my post ETHUSD - Q1 2018 best buy "backed by history", I have had several people PM to ask whether to buy now or wait for a dip in ETHBTC. I think that question really depends on whether you think we have completed wave 3 in ETHBTC or not.
Whilst the three bull periods share a lot in common, there are differences which make it difficult to be clear on the path it will take from start to end. I've tried to analyse a number of signals to see what they are suggesting:
1D 50 EMA - suggests wave 3 top still to come
In both cases we had wave 1 breaking above the 50EMA and wave 2 breaking below.
Wave 3 then followed with a pull away from the 50EMA and the 50EMA hitting angles of over 60 degrees. In 2016 bull we can see we had a period of consolidation towards the 50EMA before completing the 3rd wave. In 2017 bull we had an early consolidation towards the 50EMA but then didn't go near it until the completion of wave 3.
In both cases Wave 4 consolidated down but didnt quite touch it.
In 2018 whilst we had a small pull away from the 50EMA in early Jan, we have not yet had close to the 60 degree 50EMA. We could now be in the consolation phase towards it which preceded both significant upticks previously.
Parabolic moves - suggests wave 3 top still to come
Both 2016 and 2018 saw a prolonged parobolic curve during the 3rd wave. We saw an attempt at this in early Jan but it hasn't happened yet.
Fib extension - suggests wave 3 top still to come
Wave 3 in 2016 and 2017 had eye watering FIB extensions of 6.618 to 8.618 respectively from wave 1. We are 'only' at 3.618.
Wave duration - undecided but close to needing wave 3 to have finished
Wave 3 lasted 45 and 52 days in 2016 and 2017 respectively. We are 47 days into this wave.
RSI - undecided but wave 3 could be finished
In 2016 and 2017 both had a 90+ RSI during wave 3. 2018 has only achieve 80 so far.
In 2016 and 2017 both wave 3s ended by RSI divergence in the overbought area, 2016 with flat divergence, 2017 with more significant divergence. 2018 has seen the same flat RSI divergence on a similar twin peak to 2016.
The above seem to me to reasonably conclude, but leaves room for doubt, that if past performance is to replicate itself we have not yet seen the end of wave 3.
It could be that history is repeating itself but on a smaller scale. A signal for this would be if we were to touch or break the 50EMA. That would draw me to conclude that we have done wave 3. This would also suggest to me that wave 4 contraction should be smaller than the 80% we have seen historically and the wave 5 impulse will also be smaller. If we break it significantly it could invalidate the entire hypothesis and we may not be in a 5 wave impulse (previous years only broke 50EMA in wave 2 and 5).
Trading on a larger timeframe allows me to be less concerned about the entry point and more focused on the exit point. I was 80/20 ETH/BTC prior to the correction and went to cash and BTC heavy during it because BTC has been stronger during corrections (I'm revisiting this decision for future). I have been gradually moving to 50/50 ETH/BTC and now plan to average in over to ETH in the coming days and weeks. Once there is more clarity over wave 3, I'll look to adjust that decision making process and potentially pull back or speed it up. The main thing I am watching for now is how close to the 50EMA we get and whether there is a strong bounce back (wave 3 continue) or we continue through (into wave 4 or invalidation).
Note: Updates throughout the following period will be made to ETHUSD - Q1 2018 best buy "backed by history" rather than here. Please post any questions and comments there.
Whilst the three bull periods share a lot in common, there are differences which make it difficult to be clear on the path it will take from start to end. I've tried to analyse a number of signals to see what they are suggesting:
1D 50 EMA - suggests wave 3 top still to come
In both cases we had wave 1 breaking above the 50EMA and wave 2 breaking below.
Wave 3 then followed with a pull away from the 50EMA and the 50EMA hitting angles of over 60 degrees. In 2016 bull we can see we had a period of consolidation towards the 50EMA before completing the 3rd wave. In 2017 bull we had an early consolidation towards the 50EMA but then didn't go near it until the completion of wave 3.
In both cases Wave 4 consolidated down but didnt quite touch it.
In 2018 whilst we had a small pull away from the 50EMA in early Jan, we have not yet had close to the 60 degree 50EMA. We could now be in the consolation phase towards it which preceded both significant upticks previously.
Parabolic moves - suggests wave 3 top still to come
Both 2016 and 2018 saw a prolonged parobolic curve during the 3rd wave. We saw an attempt at this in early Jan but it hasn't happened yet.
Fib extension - suggests wave 3 top still to come
Wave 3 in 2016 and 2017 had eye watering FIB extensions of 6.618 to 8.618 respectively from wave 1. We are 'only' at 3.618.
Wave duration - undecided but close to needing wave 3 to have finished
Wave 3 lasted 45 and 52 days in 2016 and 2017 respectively. We are 47 days into this wave.
RSI - undecided but wave 3 could be finished
In 2016 and 2017 both had a 90+ RSI during wave 3. 2018 has only achieve 80 so far.
In 2016 and 2017 both wave 3s ended by RSI divergence in the overbought area, 2016 with flat divergence, 2017 with more significant divergence. 2018 has seen the same flat RSI divergence on a similar twin peak to 2016.
The above seem to me to reasonably conclude, but leaves room for doubt, that if past performance is to replicate itself we have not yet seen the end of wave 3.
It could be that history is repeating itself but on a smaller scale. A signal for this would be if we were to touch or break the 50EMA. That would draw me to conclude that we have done wave 3. This would also suggest to me that wave 4 contraction should be smaller than the 80% we have seen historically and the wave 5 impulse will also be smaller. If we break it significantly it could invalidate the entire hypothesis and we may not be in a 5 wave impulse (previous years only broke 50EMA in wave 2 and 5).
Trading on a larger timeframe allows me to be less concerned about the entry point and more focused on the exit point. I was 80/20 ETH/BTC prior to the correction and went to cash and BTC heavy during it because BTC has been stronger during corrections (I'm revisiting this decision for future). I have been gradually moving to 50/50 ETH/BTC and now plan to average in over to ETH in the coming days and weeks. Once there is more clarity over wave 3, I'll look to adjust that decision making process and potentially pull back or speed it up. The main thing I am watching for now is how close to the 50EMA we get and whether there is a strong bounce back (wave 3 continue) or we continue through (into wave 4 or invalidation).
Note: Updates throughout the following period will be made to ETHUSD - Q1 2018 best buy "backed by history" rather than here. Please post any questions and comments there.
Note
Update posted here
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