Hello and welcome to another update on Ethereum! As we head into a new trading week, Ethereum's price movements are unfolding as expected, without any surprises. In our previous article, released earlier today, we discussed two possible scenarios: the more bullish blue count and the yellow count. Both scenarios suggested lower prices, either in wave three (yellow count) or wave C or B (blue count).
Key Levels and Scenarios
The critical area to watch is the invalidation point for the blue scenario, located at $3,355. For the yellow scenario, the target area for wave three is between $3,380 and $3,333. Ideally, the price should at least reach $3,362, which is the 138% extension of wave one to the downside. While the exact position of wave one is a bit messy, we'll keep our current analysis as is.
Scenario Analysis
Blue Count
If the blue count is correct, Ethereum must avoid breaking below the invalidation line at $3,355. As I've mentioned in recent videos and signals for our Gold members, I am leaning towards the yellow count unless we see an upside breakout of the current range. A minimal requirement for a bullish breakout would be a break above the nearest resistance level at $3,586, with a more significant confirmation coming from a break above $3,650 (the upper boundary line of the current price range).
Yellow Count
The yellow count is preferred, suggesting that we should see a completion of wave three, followed by waves four and five. If this scenario plays out, I'd like to see the price drop slightly lower. Strong support should be found around the 50% retracement level, which overlaps with the 1.618 extension around $3,335.
Resistance and Support Levels
For wave four in the yellow count, the nearest resistance area is between $3,440 and $3,476. A break above $3,476 could indicate, but not confirm, that we are moving up in wave C of the blue count.
Conclusion
In summary, we have a more bearish scenario (yellow count) and a scenario that could turn bullish (blue count) if certain levels are breached. The key pivot level is $3,476. As long as the price stays below this level, further downside is expected in waves four and five. While I find the yellow count more likely, it's important to consider both scenarios and remain objective.