credits:istock.com/LEEDDONG
Ethereum Coin Has Only Begun Its Move Towards Higher Prices
It is an exciting time for currencies. Bitcoin has been creating new highs for many months, and now other cryptocurrencies are following suit.
I am focusing on the Ethereum coin price because I have reason to believe that mind-boggling prices are on the horizon. These beliefs are centered around a technical price pattern that was completed on November 23rd. This pattern I speak of was first highlighted on November 21, in a publication titled “The Ethereum Coin Price Is Setting Its Sights on $6,000.00+.”
Using price patterns to generate views on an investment is known as “technical analysis.” This method of investment analysis is predicated on the notion that historical price and volume data points can be used to forecast what the future may bring. I have been studying and applying this method for close to two decades, and I feel I am well equipped to take on the task of analyzing the ETH coin price chart.
The Completed Technical Price Pattern
The following Ethereum price chart illustrates the completed technical price pattern:
Chart courtesy of TradingView.com
The pattern highlighted on this ETH coin price chart is a triangle pattern, and it is among my favorites.
The pattern is created when the price action on the price chart is characterized by a series of lower highs and higher lows. It is then identified using two converging trend lines that connect these series of highs and lows. These trend lines define the triangle, as well as levels of price support and resistance.
The reason why I am so enamored with this type of pattern is because it is known for its explosive breakouts. This pattern is explosive because as the pattern develops, the contractions of space between support and resistance acts like a coiled spring that causes energy to be stored within the pattern. This stored energy is finally released when price breaks above resistance or below support.
In this case, Ethereum coin prices broke above resistance at $380.00, implying that an explosive move towards higher prices is now in development. As a testament to this notion, ETH coin prices have gone on to make a new all-time high and have appreciated by 35.53% since this level of resistance was broken.
This triangle pattern is an instrumental wave within an much larger wave structure which is currently suggesting that much higher prices are in development.
Constructive Price Action
The following Ethereum price chart illustrates the waves structure that is responsible for creating constructive price action:
Chart courtesy of TradingView.com
Constructive price action describes an alternating wave structure consisting of impulse waves and consolidation waves, which are responsible for creating and sustaining a trend.
The impulse waves are highlighted in green and they define the stage in a bullish trend where assets price make a sustained an relentless move towards higher prices. All the gains in a bullish trend are captured within this wave.
The consolidation waves, highlighted in purple, define the stage in a bullish trend where the assets price refrains from advancing, and instead a correction ensues. This correction is necessary in order to sustain the health of the trend because it unwinds any overbought conditions that were created in the impulse wave that preceded it. Unwinding an overbought condition creates the necessary environment where a new advancing impulse wave can develop.
The triangle pattern is a consolidation wave within this wave structure, and its completion suggests that a new advancing impulse wave is now in development, and therefore much higher ETH coin prices are on the horizon.
The great thing about this waves structure is that not only does it suggest that higher prices are in development via an impulse wave, but it can also be used to create a potential price objective for this wave.
The Ethereum Coin Price Forecast
The theory surrounding constructive price action suggests that impulse waves that are separated by a consolidation waves tend to mirror each other in terms of length. This length can either be linear-based or log-based.
The linear objective is created by taking the length of the initial impulse wave, which was $406.35 in length, and adding that value to the base of the consolidation wave. This creates a liner objective for Ethereum coin prices at $542.47.
The log-based objective is crated using the same methodology, except instead of using the length in dollars, the % change is used. This is refereed to as a “parabolic extension,” and when I apply it to the to the price chart, it creates a $9,000.00 price objective for ETH.
Under normal circumstances, I would use the objective suggested by the more conservative linear approach. But because the cryptocurrencies have a tendency for parabolic extensions, I have to believe that the $9,000.00 ETH coin price objective is a more plausible target.
Analysts Take:
On November 23, Ethereum coin prices broke out of a technical price pattern, which is now suggesting that much higher ETH coin prices are on the horizon. I will continue to believe that higher prices are in development until the $9,000.00 objective is met, or there are indications on the Ethereum price chart that suggest another view is warranted.
Source: Price Confidential
