Ethereum appears to be in its overarching Wave 5, which is forming an ending diagonal pattern. This structure implies that each wave within Wave 5 is composed of three-part (A-B-C) corrective waves, rather than impulsive waves. Within this context, we are either in Wave 4 or have already started Wave 5 of 5.
Key Observations
- Ending Diagonal Pattern: Ending diagonals typically signify the end of a trend, as they are often seen in terminal waves. Each wave (1, 2, 3, 4, and 5) is subdivided into three-part corrective structures instead of the standard five-wave impulsive structure.
- Wave 4 or Wave 5: The current structure indicates that we are either completing Wave 4 or have already started Wave 5 of the larger Wave 5. The next significant pullback will be a critical indicator. If this pullback forms a deep corrective wave, it could confirm the end of Wave 4, leading us into Wave 5.
Potential Scenarios
- Wave 4 as an XWY Correction: If we are still in Wave 4, this could unfold as a complex corrective structure, such as an XWY correction. In this scenario, we could see additional corrective movements before Wave 5 initiates.
- Wave B in Wave 5: Alternatively, if we are in Wave 5, the current movement could represent a B wave within this final wave. This would suggest that a further pullback (Wave C of Wave 5) could complete the ending diagonal structure.
Strategic Implications
The next substantial pullback in Ethereum will be pivotal for confirming whether we are in the final stages of Wave 4 or if we are indeed progressing through Wave 5. Traders should closely monitor support levels and the structure of the correction to identify potential entry points or to manage risk for any long positions.