Ethereum readies for a correction as ETH braces for a drop to $4,000

Ethereum price continues to trudge higher, but some selling pressure enters the market.
Seven-week Gann ‘Death Zone’ time cycle complete, a corrective move likely.
The downside risk is likely to be limited.

Jonathan Morgan Independent Analyst

Ethereum price has now completed seven consecutive weeks of the weekly candlesticks closing above their open. In other words, seven straight weeks of green/white weekly candlesticks. That is a record for Ethereum; the previous consecutive bullish weekly candlestick record close was five – between the weeks of May 19th 2017, and June 16th 2017.

Ethereum price could drop 20% as Gann and Ichimoku warn of a big dip coming soon

Ethereum price is primed for a violent and swift mean reversion trade. This is due to a critical time cycle in Gann analysis known as the ‘Death Cycle.’ Gann warned that any instrument trending at a steep angle for seven weeks (forty-nine to fifty-two days) is at risk of a near-immediate corrective move or trend change.

Complimenting Gann’s time cycle analysis is the Ichimoku Kinko Hyo system’s confirmatory price behavior. Ethereum price has extensive gaps between the bodies of the weekly candlesticks and the Tenkan-Sen. Gaps between candlestick bodies and the Tenkan-Sen do not last long and often resolve in roughly four to six periods.

The projected retracement is the $4,000 value area near the weekly Tenkan-Sen, but Ethereum price could travel lower to the Kijun-Sen at $3,300. While doubtful to occur, if Ethereum faces a capitulation move south, its final support on the weekly chart is at $2,300, where Senkou Span B and the 38.2% Fibonacci retracement reside.

ETH/USD Weekly Ichimoku Chart

An invalidation of the projected retracement south would occur if Ethereum were to close at a new all-time high.

Author

Jonathan Morgan

Independent Analyst

Jonathan has been working as an Independent future, forex, and cryptocurrency trader and analyst for 8 years. He also has been writing for the past 5 years.