As my investment into cryptocurrency increases so has my knowledge of how to "predict" the markets. As of late I have been diving into Elliot Wave Theory. The theory "states that stock prices are governed by cycles founded upon the Fibonacci series" (Dash and Patil 1). In particular that they are governed by 4x up and 3x down movements (Dash and Patil 1). To test this, I modeled Cardano (ADA) from 10 Mar 20 to 19 Sept 21. Below is the graphical depiction of 2x degrees of analysis. Further in the post I will add another degree to identify each price movement. Also, I suggest you right-click on the picture and open it in a new tab to see the picture as full size.
Wave 1: 10 Mar 20 - 5 Aug 20
Wave 1 consisted of a Leading Diagonal (3-3-3-3-3).
Wave 2: 6 Aug 20 - 6 Oct 20
Wave 2 consisted of a Zigzag Correction (5-3-5).
Wave 3: 7 Oct 20 - 27 May 21
Wave 3 consisted of a Leading Diagonal (5-3-5-3-5).
Wave 4: 10 Mar 20 - 5 Aug 20
Wave 4 consisted of a Zigzag Correction (5-3-5).
Wave 5: 6 Aug 20 and on
Wave 1 started at $0.02, increased to $0.156 (7.8x), and retraced 50% to $0.08 at the end of Wave 2. Wave 3 started at $0.08, increased to $2.118 (26.475x), and retraced 50% to $1.099 at the end of Wave 4. As it stands now I believe we are nearing the end of Subdivision ii in Wave 5 and if all goes to plan it will end and begin an uptrend right at the start of the Cardano Summit (25 - 26 Sept 21). The graph so far leads me to believe that the 3rd Wave is the "extension." Using that assumption and Figure 21 from D'Angelo and Grimaldi, the theory estimates that Wave 5 should end around $8.57.
- Elliott Wave Theory : Rules, Guidelines and Basic Structures
- Dash, Mihir & Patil, Anand. (2009). An Exploratory Study of Elliott Wave Theory in Indian Stock Markets. SSRN Electronic Journal. 10.2139/ssrn.1412733.
- D'Angelo, Eugenio & Grimaldi, Giulio. (2017). The Effectiveness of the Elliott Waves Theory to Forecast Financial Markets: Evidence from the Currency Market. International Business Research. 10. 1. 10.5539/ibr.v10n6p1.
- A Capsule Summary of the Wave Principle