Today, I will look at a coin that has been in the crypto market for some years already.

Rebranded on a few of occasions since its inception in January 2014, DASH has been recognised for its anonymity and marketed as being one of the first successful examples of a DAO (decentralised autonomous organisation). Though still considered by many as a privacy coin, the team has since shifted the focus on developing a fast, reliable and cost-effective payment platform to favour mass adoption at the expense of anonymity.

Since its launch, DASH has been following a clean ElliottWave pattern with an extended wave (3), which is not uncommon in cryptos. The current move suggests we are currently still in corrective mode and are looking for a bottom for the larger degree wave (4) to complete before the bull run resumes.

 

Elliott Wave analysis DASHUSD – October 18th 2018

Extended Wave 3

In ElliottWave Theory, the points listed below are characteristic of a 3rd wave move:

  • Extends to 1.382-1.618 of the length of wave 1
  • Generates the highest volume and price movement
  • Cannot be the shortest of the impulsive waves

In some instances, the 3rd wave move can be very strong and take the shape of what is known as an extended impulsive wave. This wave will clearly show a fractal 5-wave pattern within the full move and usually extend higher than the 1.618 extension of wave (1). Looking at the above chart, DASH topped right at the 2.000 log extension of wave (1), accompanied by a strong volume around March 2017 in what I labelled as the smaller degree wave 3 of the larger extended wave (3). DASH is now in a wave 4 correction and is looking for a bottom.

Wave 4 Correction

Fourth waves are usually the trickiest of all moves as they tend to trend sideways and can protract for an extended period of time, bringing uncertainty in the market, often forcing investors to pull out as they impatiently wait for a break out in either direction which never seems to realise. The general guidelines for wave 4 are listed below:

  • Retraces to either 38.2% or 50% of the full wave 3 move
  • Bottoms close to the previous smaller degree wave 4
  • Is usually longer and shallower than wave 2 (alternation)

The last point can help us predict the shape that wave 4 will take based on how wave 2 of the same degree played out. If the latter follows a deep correction, wave 4 will generally trend sideways and extend time-wise, either following a standard ABC move down or take the shape of a triangle.

Price Forecast

As detailed in my previous post, EOS Short-Term Analysis: Estimating a Bottom, Fibonacci Pinball can provide us with a guideline as to which levels the price will hit as it moves in the primary direction, in this case upwards. When the price hits a certain fibonacci level as a 3rd wave, the corrective move that follows will usually bottom three levels lower. However, given that this move was an extended wave, the ensuing correction is often deeper and can drop one or more levels lower. This is what we’re seeing with DASH as it already dropped under the expected 1.382 fib level.

This plays perfectly in the EW rulebook as two next levels (1.236 and 1.000) match the 38.2% and 50% retracements of the full wave (3) move, outlined as the blue box in the above chart, typical of a wave 4 correction. Should the price push strongly above $1,000, I will consider DASH having already bottomed at $130, however, this is not my primary expectation at the moment.

Once a bottom is confirmed, the ensuring move should take DASH to at least the 238.2% extension at $6,575, potentially moving higher. Patience pays.

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Responses

    1. Matthias Post author

      Thank you. The recent upswing in DASH is corrective in nature so I still expect more downside before a bottom is in place. That up move could in theory be a wave A of an ABC move with a C wave up still in the cards. However, that would be invalidated if DASH drops below $147.

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