Bitcoin's Big ABC Correction or Trend Change? Part 6
Updated
There it finally is, our answer for the ABC or impulse wave question since i started this analysis back in Jan. The past weeks, actually most of March both sides were not getting any clear signs for a continuation of the rally or a failure. Was moving sideways with small rallies and dumps, fake breakouts on the up and downside. The last few days before the breakout things got a bit easier because the bulls simply held their ground and it never got below the 4000 level again. Even that small ABC i talked about in my previous Bitcoin' analysis happened, but it was a very small dump and pump to 4035 and back above 4100 to continue the rally again. This small ABC should have moved towards the 4000, but it seems there were not enough bears but probably too many bulls waiting to get in, so that move happened in minutes instead of several hours. Actually a sign of eager bulls waiting to get in.
Anyway, the 5200 target i mentioned in Jan got reached in 1 shot. It was obvious the 4200 was a major level, but i actually thought the 4600ish would at least show some resistance from the bears. But the liquidations and stops that got triggered were simply too much, in combination that there are simply no sellers around, making the order book empty and there for clearing the path way to 5K+. I will make an educational post about this, explaining it a bit more.
Because this move up was so strong and with high volume, it's almost sure that we will see another wave up before any big correction happens. Also something to keep in mind, since wave 2 was very slow it usually says that wave 4 is much faster. So while wave 2 took like 2 months, wave 4 should be a matter of weeks. Now short term anything can happen, we can see a fake break up to like 5400 and then dump (a shake out move) like the blue line, or we simply just move down again from these levels. I think it's very unlikely to see a continuation of the rally within a day or 2, would be much too soon IMO. If it does happen, this could be that long term V shape low, which would mean the bear market is very likely behind us already. I think this is very unlikely. That would mean this market is as strong as in 2017.
Most likely to see here is, moving sideways for maybe another week or so in the 5400/4600 range before wave 5 starts. The reason why i put wave 5 around that level, is because it would be the ideal bull trap zone. Breaking the 6K, knowing the whole market will get crazy again and starts to buy with all the confidence in the world again. Usually this would be the moment where the pro's start to distribute for high prices again, until buying volume dries up and we slowly move down again. Knowing how this market has played out in the past, we will probably stay above the 4700ish. All the rallies in the 2018 happened without any good, big and healthy corrections. That is the reason why these all those rallies were temporarily. In other words, i would be much more bullish long term, if we would see a retest of the 3900/4200 level the coming 2 months. We need to see this zone becoming the new 3200/3400 zone from the past months. A level that was unbreakable by the bears. A level where bulls just getting in. If this zone shifts to the 4000 area, then it could mean the bear market might be over already. I talked about these things several times before a year ago during the rallies, that without a big retest of support zones, these rallies will be short lived.
When looking at OI of Bitmex, which is still at only 430 mil, it shows there won't be enough fuel to make a V shape rally. At least by using short positions as fuel. So if we do see a big rally, it would mean it's all buying power which and therefore increases the chances for the end of the bear market.
Normally, at 5K prices the OI should be above 500 mil as well to see legit movement. So my assumption now is, until we see OI get above 500 mil, we won't see a real breakout. Maybe a fake one like the blue line suggest on the right. We saw a similar move in July 2018.
I had a view short term the past days which i shared in my channels, but at this point i really don't know. All i do know is that 4650/4750 would be the ideal entry zone for the second wave up. If we do break up as the blue line suggests, but with low volume, i might even simply short it. But rather just sit and wait to see how things play out first, preferable seeing it drop towards the 4700ish. So buyers can step in again, OI can increase again to normal levels and then seeing the rally continue. From past experience, the fun days of day trading were the first few days after the pump, now it becomes much more random. So just a small heads up.
Mid-term, think it's clear i expect at least another wave up. In theory it could be only 100 points above the previous 5350 high. But think a minimum of 5600/5800 should be expected. If we are lucky, we get to see a nice pattern which gives us a target price.
Long term, can't say, just as i didn't want to predict if we would see a trend change or just a big correctional wave within the bear market. That is still the case. Rather just judge things as they go. Like it's easier to judge now that we might reach 6K+, making it much more realistic, while a month ago it would have been a big gamble betting on 6K+ prices
Previous analysis:
Part 5:
Anyway, the 5200 target i mentioned in Jan got reached in 1 shot. It was obvious the 4200 was a major level, but i actually thought the 4600ish would at least show some resistance from the bears. But the liquidations and stops that got triggered were simply too much, in combination that there are simply no sellers around, making the order book empty and there for clearing the path way to 5K+. I will make an educational post about this, explaining it a bit more.
Because this move up was so strong and with high volume, it's almost sure that we will see another wave up before any big correction happens. Also something to keep in mind, since wave 2 was very slow it usually says that wave 4 is much faster. So while wave 2 took like 2 months, wave 4 should be a matter of weeks. Now short term anything can happen, we can see a fake break up to like 5400 and then dump (a shake out move) like the blue line, or we simply just move down again from these levels. I think it's very unlikely to see a continuation of the rally within a day or 2, would be much too soon IMO. If it does happen, this could be that long term V shape low, which would mean the bear market is very likely behind us already. I think this is very unlikely. That would mean this market is as strong as in 2017.
Most likely to see here is, moving sideways for maybe another week or so in the 5400/4600 range before wave 5 starts. The reason why i put wave 5 around that level, is because it would be the ideal bull trap zone. Breaking the 6K, knowing the whole market will get crazy again and starts to buy with all the confidence in the world again. Usually this would be the moment where the pro's start to distribute for high prices again, until buying volume dries up and we slowly move down again. Knowing how this market has played out in the past, we will probably stay above the 4700ish. All the rallies in the 2018 happened without any good, big and healthy corrections. That is the reason why these all those rallies were temporarily. In other words, i would be much more bullish long term, if we would see a retest of the 3900/4200 level the coming 2 months. We need to see this zone becoming the new 3200/3400 zone from the past months. A level that was unbreakable by the bears. A level where bulls just getting in. If this zone shifts to the 4000 area, then it could mean the bear market might be over already. I talked about these things several times before a year ago during the rallies, that without a big retest of support zones, these rallies will be short lived.
When looking at OI of Bitmex, which is still at only 430 mil, it shows there won't be enough fuel to make a V shape rally. At least by using short positions as fuel. So if we do see a big rally, it would mean it's all buying power which and therefore increases the chances for the end of the bear market.
Normally, at 5K prices the OI should be above 500 mil as well to see legit movement. So my assumption now is, until we see OI get above 500 mil, we won't see a real breakout. Maybe a fake one like the blue line suggest on the right. We saw a similar move in July 2018.
I had a view short term the past days which i shared in my channels, but at this point i really don't know. All i do know is that 4650/4750 would be the ideal entry zone for the second wave up. If we do break up as the blue line suggests, but with low volume, i might even simply short it. But rather just sit and wait to see how things play out first, preferable seeing it drop towards the 4700ish. So buyers can step in again, OI can increase again to normal levels and then seeing the rally continue. From past experience, the fun days of day trading were the first few days after the pump, now it becomes much more random. So just a small heads up.
Mid-term, think it's clear i expect at least another wave up. In theory it could be only 100 points above the previous 5350 high. But think a minimum of 5600/5800 should be expected. If we are lucky, we get to see a nice pattern which gives us a target price.
Long term, can't say, just as i didn't want to predict if we would see a trend change or just a big correctional wave within the bear market. That is still the case. Rather just judge things as they go. Like it's easier to judge now that we might reach 6K+, making it much more realistic, while a month ago it would have been a big gamble betting on 6K+ prices
Previous analysis:
Part 5:
Note
Educational post, explaining the short squeeze
Note
So far that fake breakout version seems to be what the market is doing (blue line from the primary chart). There has not been a sell off from the high which shows there is no panic selling, which is normally a bullish sign. This used to be different the past months. On the left we can see there was a small break up from that possible triangle, just had the retest of it and so far a small bounce as well. But this is the key moment usually at a retest. Normally, we should see a solid strong break up above yesterday's high with good volume. But what i expect is, a lower volume move up (like we are doing now), moving a bit slow (what it is not really doing yet) and make a lower high or a slightly higher high and then fail. Like the 2 blue lines on the left show.
On the right, we can see a possible inverse H&S in the making, what a realistic play here usually is, is seeing the right shoulder taking a lot of time (which means there are no eager bulls to buy it up).
So if the red on the right breaks, the HH version can play out. A good indication would be seeing a slow rally when the high breaks. Staying below the red, seeing rejection there, would be a good guideline as well.
A break of the triangle, with high volume, would make increase the chances a lot more for a big shake out to the 4600/4900 zone. A break of 5100 would be a first sign of weakness, a break of 5000/4980 would make an even bigger dump much more likely.
So i think short term, upwards potential is limited, only a good volume break of 5400 would proof this theory wrong.
Note
There was a good fight going on a few hours ago at the 5300/20 high, then a small bart move down that got pushed back up just as easily. Almost the same as yesterday. At the moment it's moving almost identical even. That inverse H&S i talked about in the previous analysis played almost to the point, but the red zone broke and that's why we tested the high once again. When judging objectively, have to say that it's certain that bears are very weak. Like the tables have been turned now past days compared to the past months. Seeing several Bart move attempts but so far most of them simply fail. When looking at some of the bigger alts, like they don't want to move up, except for ETH, that lead yesterday's rally.
So i still think we will drop before continuing the rally, but can't say i am very sure about it. Because the longer we stay at the high, the bigger the chances become the resistance will break.
Note
New Alt coin market cap analysis:
Note
Moved almost identical to yesterday, but this time the second drop is a bit weaker, but small detail which could be meaningless. Alts have improved compared to 12 hours ago, but still in the danger zone for a correction. Think for Bitcoin, a break of 5280ish would be a first good step again. A break of 5330/50 could trigger a bigger wave up again. I still think chances are bigger for a drop than a real rally, so i am still considering a fake break up, but it's getting less sure while time passes.
Note
Forgot to post this one with the last update, but nothing special so far though. Can see yesterday's triangle played out almost porfectlyNote
New Bitcoin analysis:
Note
While i was writing this, it made another pump and rejection again, confirming the double top idea even more. Now this channel on the right should hold. Selling volume is increasing a bit as well now. So if the channel breaks AND the 5240ish support, if they break with high volume, it could be it already, at least would be smart to be on your toes with longs :)
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