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Binance Coin (BNB) is unloading a trend wave that could reach $1,500 within the next few months. Using Elliott Wave Theory as our guide, we inspect the market’s trends (called ‘waves’) to determine where we are within the eight-wave Elliott wave sequence.
Within the idealized eight-wave structure, the market rallies in five waves followed by a three-wave setback labeled ‘A-B-C.’ The crypto market is also fractal, so the patterns we see for larger trends also appear within the smaller trends too.
Considering a starting point of the March 2020 pandemic low for BNB, it appears the five-wave advance is incomplete with only four waves knocked out.
Source: TradingView
This implies BNB is now rallying in a fifth and final wave of the advance before embarking upon a more meaningful setback.
Source: TradingView
The market is fractal, so within the fifth wave, we can expect it to unfold in five waves as well, taking the shape of an impulse wave or ending diagonal pattern. At time of writing, we can count only waves (i) and (ii) in place and complete. This implies BNB is rallying in wave (iii) that could carry it to new all-time highs.
Source: TradingView
One awesome aspect of market analysis with Elliott Wave Theory is that there is a market geometry at play. The waves and the trends are related to one another. Therefore, we can reasonably estimate how far this larger fifth wave might carry.
Many times, wave five and one are related by a Fibonacci distance or they are equal. When we apply this to the chart above, wave five equals the distance of wave one at $741 (see chart above) nice gain but still a little on the small side for typical fifth waves.
Wave five is 1.618 times the length of wave one at $1,435.
Additionally, wave five target estimates can be generated using the distance of waves one through three. For example, 38.2% the distance of waves one through three appears near $1,524.
When we mix these ingredients together, a fairly tight cluster of target prices is created near $1,500. Therefore, it would be common for a market of BNB’s structure to rally from here to near $1,500 before finding a more meaningful top and correction.
Keep in mind, these targets and wave relationships are generated using a logarithmic scale price chart. Since crypto markets have the tendency to increase significantly during a trend, using a log scale price chart standardizes the trends on the chart such that a move from $10 to $20 is the same distance as a trend from $250 to $500.
Jeremy Wagner, CEWA-M, is a chart reading expert with a focus on Elliott Wave Theory. Jeremy earned the certified Elliott Wave analyst with high honors and was awarded the rare master’s designation (CEWA-M). You will find him teaching Elliott Wave and Fibonacci to traders through See The Waves.
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