Elliott Wave Analysis: Bullish Wave 3 Confirmation
The updated chart suggests that Wave 2 of the Elliott Wave cycle is nearing its completion, and we are positioned for the beginning of Wave 3, the most impulsive wave.
Wave 2 Levels and Structure
Price Levels:
The correction of Wave 2 has retraced briefly but is finding support at the 50% Fibonacci retracement level around $3.01.
The 78.6% retracement level at $1.40 remains a critical invalidation level for this wave count.
Volume:
A declining volume during the correction supports the idea of a consolidation phase, typical before the next impulsive wave.
Support Zone:
Primary support levels are:
$3.01 (50% retracement): Key psychological and Fibonacci support.
$2.20 (61.8% retracement): Structural support level.
$1.40 (78.6% retracement): Ultimate invalidation for this bullish count.
Wave 3 Projection
Using Fibonacci extensions of Wave 1 for projecting Wave 3:
1.618 Extension (Primary Target): $12.88 – Typical target for Wave 3.
2.0 Extension (Extended Target): $15.40 – Strong wave momentum scenario.
2.618 Extension (Highly Optimistic): $30.17 – Maximum potential target for a parabolic move.
Momentum Indicators
MACD:
The MACD on higher timeframes (weekly) is attempting to flatten, signaling that bearish momentum is decreasing.
A bullish crossover will confirm Wave 3 initiation.
RSI:
The RSI is currently stabilizing near 40-50, a typical zone where corrections end and new impulses start.
Watch for RSI to cross above 50 as a confirmation of strengthening bullish momentum.
Trade Strategy
Entry Strategy:
Accumulate positions near $2.20-$3.01 (61.8%-50% retracement levels).
Confirmation entry on a breakout above $3.50, which aligns with Wave 1's high.
Stop-Loss:
Conservative: Below $2.00 (below 61.8% retracement for minimal risk).
Aggressive: Below $1.40 (78.6% retracement, Wave 2 invalidation).
Targets:
Take Profit 1: $12.88 (1.618 extension).
Take Profit 2: $15.40 (2.0 extension).
Take Profit 3: $30.17 (2.618 extension).
Risk-to-Reward:
With an entry near $2.50 and a target of $12.88, the trade offers a R:R ratio of ~4:1.
Confirmation Signals
Break of the $3.50 resistance will strongly confirm Wave 3 initiation.
Increasing volume and MACD bullish crossover are essential for validating the impulsive move.
RSI moving above 50 will confirm upward momentum.
Conclusion
The updated price levels and Fibonacci projections align well with the start of Wave 3. The $2.20-$3.01 range presents an excellent accumulation zone, while the first major resistance at $3.50 must break to confirm the bullish wave count. Maintain tight risk management, and monitor volume and momentum indicators for entry confirmation.
The updated chart suggests that Wave 2 of the Elliott Wave cycle is nearing its completion, and we are positioned for the beginning of Wave 3, the most impulsive wave.
Wave 2 Levels and Structure
Price Levels:
The correction of Wave 2 has retraced briefly but is finding support at the 50% Fibonacci retracement level around $3.01.
The 78.6% retracement level at $1.40 remains a critical invalidation level for this wave count.
Volume:
A declining volume during the correction supports the idea of a consolidation phase, typical before the next impulsive wave.
Support Zone:
Primary support levels are:
$3.01 (50% retracement): Key psychological and Fibonacci support.
$2.20 (61.8% retracement): Structural support level.
$1.40 (78.6% retracement): Ultimate invalidation for this bullish count.
Wave 3 Projection
Using Fibonacci extensions of Wave 1 for projecting Wave 3:
1.618 Extension (Primary Target): $12.88 – Typical target for Wave 3.
2.0 Extension (Extended Target): $15.40 – Strong wave momentum scenario.
2.618 Extension (Highly Optimistic): $30.17 – Maximum potential target for a parabolic move.
Momentum Indicators
MACD:
The MACD on higher timeframes (weekly) is attempting to flatten, signaling that bearish momentum is decreasing.
A bullish crossover will confirm Wave 3 initiation.
RSI:
The RSI is currently stabilizing near 40-50, a typical zone where corrections end and new impulses start.
Watch for RSI to cross above 50 as a confirmation of strengthening bullish momentum.
Trade Strategy
Entry Strategy:
Accumulate positions near $2.20-$3.01 (61.8%-50% retracement levels).
Confirmation entry on a breakout above $3.50, which aligns with Wave 1's high.
Stop-Loss:
Conservative: Below $2.00 (below 61.8% retracement for minimal risk).
Aggressive: Below $1.40 (78.6% retracement, Wave 2 invalidation).
Targets:
Take Profit 1: $12.88 (1.618 extension).
Take Profit 2: $15.40 (2.0 extension).
Take Profit 3: $30.17 (2.618 extension).
Risk-to-Reward:
With an entry near $2.50 and a target of $12.88, the trade offers a R:R ratio of ~4:1.
Confirmation Signals
Break of the $3.50 resistance will strongly confirm Wave 3 initiation.
Increasing volume and MACD bullish crossover are essential for validating the impulsive move.
RSI moving above 50 will confirm upward momentum.
Conclusion
The updated price levels and Fibonacci projections align well with the start of Wave 3. The $2.20-$3.01 range presents an excellent accumulation zone, while the first major resistance at $3.50 must break to confirm the bullish wave count. Maintain tight risk management, and monitor volume and momentum indicators for entry confirmation.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.