BitcoinShort
Will the Downward Momentum Bring New Lows?
Updated
In this idea we are focusing on the daily time frame and the broader price structure.
First a quick note on the recent drammatic 1000+ point drop from the $7450+ highs. As other traders have mentioned, these markets are extremely dangerous to trade on margin, unless you’re coming in and out for a quick 1-2%. There is just too much risk of a short or long squeeze that is almost guaranteed to trigger your stops, assuming you’ve set them. If you can avoid trading these markets on margin you have much more ability to weather the volatile whale stop-hunting price storms. There were so many bull move fake-outs promising to break 7.5k that if you didn't have your short stops triggered, count yourself among the lucky (or crazy) ones.
Several patterns have emerged on the broader time scale, including local highs that touch the sweeping green arc as it approaches the long-term trend line. What’s interesting about this arc is that we can actually call it a Fibonacci arc, as each subsequent high retraces to almost exactly 0.618 the previous high, and touches a point precisely on this arc.
There is also a strong upper resistance line in yellow that the recent bull wave nearly touched and then retreated from.
One of the difficulties in tracking the recent bull wave was the lack of an obvious ABC correction in the previous bear wave. Was the recent bull wave a bull-trap B wave of an ABC correction, or a full-fledged bull impulse wave? It’s still a little unclear, as the previous bear trend had no real counter-correction. But I’ve chosen to label this recent bull wave as the B wave of an ABC correction, since it didn’t reach up to the Fibonacci arc, as previous bull waves did. This B wave is a little larger than previous B waves, but it is still well within the requirements of Elliott Wave ABC corrections, retracing exactly 0.618 of the A wave.
Also, the ABC corrections for each bull wave have C wave extensions of approx. 0.618 across the board. If we extrapolate these patterns, we might expect a C wave extension around the $5850 price region for the next low, the same as the previous low. However, each previous low has either touched or come very close to touching the lower yellow support line, so we might expect the same to happen again. This would mean a lower low around the $5600 price region. Interestingly, this is the first time that three things will intersect:
1. Lower yellow support line
2. Green long-term trend line (extremely strong support)
3. C wave 0.618+ fib. extension of AB wave
Additionally, the time frame for the last cycle, from low to low was 84 days. And if the above targets are correct, then the next low would have a similar duration from the previous low, placing it somewhere around Sept. 15, 2018.
Given these considerations, a target in the mid 5k’s could be expected in the medium term, before we begin the next bull cycle. Though it appears that the bull cycles are getting smaller with each iteration, they will likely continue until we reach some terminal limit and a final breakout above the green Fibonacci arc occurs. A break-out to the downside seems too unlikely.
Target: 5.4k-5.6k
First a quick note on the recent drammatic 1000+ point drop from the $7450+ highs. As other traders have mentioned, these markets are extremely dangerous to trade on margin, unless you’re coming in and out for a quick 1-2%. There is just too much risk of a short or long squeeze that is almost guaranteed to trigger your stops, assuming you’ve set them. If you can avoid trading these markets on margin you have much more ability to weather the volatile whale stop-hunting price storms. There were so many bull move fake-outs promising to break 7.5k that if you didn't have your short stops triggered, count yourself among the lucky (or crazy) ones.
Several patterns have emerged on the broader time scale, including local highs that touch the sweeping green arc as it approaches the long-term trend line. What’s interesting about this arc is that we can actually call it a Fibonacci arc, as each subsequent high retraces to almost exactly 0.618 the previous high, and touches a point precisely on this arc.
There is also a strong upper resistance line in yellow that the recent bull wave nearly touched and then retreated from.
One of the difficulties in tracking the recent bull wave was the lack of an obvious ABC correction in the previous bear wave. Was the recent bull wave a bull-trap B wave of an ABC correction, or a full-fledged bull impulse wave? It’s still a little unclear, as the previous bear trend had no real counter-correction. But I’ve chosen to label this recent bull wave as the B wave of an ABC correction, since it didn’t reach up to the Fibonacci arc, as previous bull waves did. This B wave is a little larger than previous B waves, but it is still well within the requirements of Elliott Wave ABC corrections, retracing exactly 0.618 of the A wave.
Also, the ABC corrections for each bull wave have C wave extensions of approx. 0.618 across the board. If we extrapolate these patterns, we might expect a C wave extension around the $5850 price region for the next low, the same as the previous low. However, each previous low has either touched or come very close to touching the lower yellow support line, so we might expect the same to happen again. This would mean a lower low around the $5600 price region. Interestingly, this is the first time that three things will intersect:
1. Lower yellow support line
2. Green long-term trend line (extremely strong support)
3. C wave 0.618+ fib. extension of AB wave
Additionally, the time frame for the last cycle, from low to low was 84 days. And if the above targets are correct, then the next low would have a similar duration from the previous low, placing it somewhere around Sept. 15, 2018.
Given these considerations, a target in the mid 5k’s could be expected in the medium term, before we begin the next bull cycle. Though it appears that the bull cycles are getting smaller with each iteration, they will likely continue until we reach some terminal limit and a final breakout above the green Fibonacci arc occurs. A break-out to the downside seems too unlikely.
Target: 5.4k-5.6k
Note
And since markets never move in straight lines, here is a possible pathway to the above 5.6k region low: Note
It's been a while since the last update as the market seemed content to move sideways for 2-3 months. However, our targets have been reached and even surpassed. The price has even broken the 5k psychological support. But I don't believe this is the time to sell. Not by a long shot. Quite the opposite, these sorts of drammatic moves are often followed by equally drammatic moves in the opposite direction. The rapidly increasing long interest is also evidence of this now sitting at almost 31k and shorts sitting at 23.5k. After the manipulators-in-chief have forced the price downwards thus liquidating a large numbers of shorts, it seems they themselves are now taking out long positions in preparatation for some bullish moves. Initial targets are in the 6k region. That said, prices may continue a bit lower down as far as the 4.5k region to really flush out any remaining short diehards.Note
Apologies, got my terminology reversed in the last couple of sentences:"After the manipulators-in-chief have forced the price downwards thus liquidating longs, it seems they themselves are now taking out long positions in preparatation for some bullish moves. Initial targets are in the 6k region. That said, prices may continue a bit lower down as far as the 4.5k region to really flush out any remaining long diehards."
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