Ethereum collapse carries message of Elliott waves

Ethereum, still the second largest cryptocurrency with a market capitalization of ~$39 billion, in 2020experienced strong growth. Until early September, ETHUSD is up 282% YTD. However, the past few days seem to have completed the bulls' winning streak. Ethereum's price dropped from $ 489 to less than $ 310, erasing over 36% of the market value in just a week. At the time of this writing, ETHUSD is changing hands at approximately $ 350. The only question is: is this a buying opportunity or the start of a big sale?

To find out, we decided to take a look atrecent dive through the prism of Elliott Wave analysis. In the hourly chart above, you can see that this is a five-wave impulse pattern denoted 1-2-3-4-5. Five sub-waves of wave 3 are also visible, they are marked with i-ii-iii-iv-v. According to the theory, impulses show the direction of a larger trend. In other words, once the current corrective recovery is over, traders should expect further weakness. The exact depth of retracement a-b-c is unknown, but below $ 310 targets are expected ahead when Ethereum bears eventually return. If this count is correct, the rest of 2020 will be very different from the first eight months.