Blocksmith Says: Reversal After ETH Rally

9 September 2022

Looking at Ethereum daily, we got the anticipated advance out of the 80-day cycle low and now the game is trading the new 80-day cycle upswing, making some gains and most importantly getting out with those gains intact. I have drawn in the anticipated trajectory of the current 80-day cycle (cyan – that’s light blue to normal people) and will explain what we are looking at and how cycles work a bit.  

There are two principles of cycles we need to consider first: harmonicity and synchronicity. The first one is simple, it’s this: the most common relationship between a cycle and its next bigger brother is 2:1 (that’s the harmonic relationship). There is an 80-day wavelength cycle in all market data. Sometimes it’s a bit longer, sometimes a bit shorter, but the long term average is 80 calendar days. There are two 80-day cycles in one 20-week cycle (green below) and we are currently in the second 80-day cycle of the current 20 week one. Its status is young and rising because it just bottomed.  

The next principle, synchronicity, states that a longer cycle trough contains all of the lesser cycle troughs at the same time and price location – i.e. they synchronise, so the 20-week trough expected mid-November must also be that of the current 80-day cycle. We are more than half way along the 20-week cycle now and its price path must be down. Which means the current 80-day trading cycle is running into a headwind. So we are expecting a rally continuation and then a reversal down.

The upside target range is US$1,780 to US$2,220 and as price moves up into that box we will be able to fine tune the likely exit point. For now though, let’s keep looking up and manage the trade and anticipate the next inflection.   

Christopher Grafton
Christopher Grafton

Chris has been working in the markets for over 15 years variously as a broker, analyst and researcher. He is the author of a well-known book on Hurst cycles analysis, and runs his own market analysis software platform on Bloomberg. He’s also a keen student of both the cello and Brazilian Jiujitsu.

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