BitcoinShort
Short Squeezes, Pumps, and Dumps, Oh My!
Updated
This market seems rife with short and long squeezes as evidenced by the many rapid red and green cliff-hanger price movements. However, the market does appear to genuinely want a correction after the recent bull move from 6k to 10k. The bear squeezes seem to be an attempt to shake out the highly leveraged shorts, who are (perhaps inadvertently) contributing to the high market volatility. Corrections are normal, without corrections there would be no infusion of new capital thus providing foundation and support for new highs. But highly leveraged shorting in crypto is just asking for trouble. Any professional trader worth his salt will advise against leveraged trading in crypto, unless you are okay with living on the edge and getting your account wiped out.
But this is crypto and so we must deal with all the market manipulation and extreme volatility, and try to find our way through the forest and the trees.
As far as TA goes, we seem to be in the 2nd leg of a C wave of an ABC correction. Looking at the above chart, the first A wave of the correction brought us down to $8200. One thing that's interesting is the appearance of a "black swan" truncated 5th leg that stops a little above this low, instead of proceeding past it as 5th waves normally do.
This is followed by the B wave consisting of a triangle ABCDE correction, which is very apparent and shown in orange. Then begins the C wave of the broader ABC correction, in which we have completed the 1st leg, and part of the 2nd leg.
Additionally, the end of the 3rd leg and 4th leg correspond to broad 0.618 and 0.5 fib. retracements which are common reversal/inflection points.
Also interesting to note is that the $7500 target seems to coincide with the broad 0.707 fib. retracement which many traders attach much significance to.
All this suggests a price target around $7500 before we begin a broader bull move, possibly to new highs.
However, it's worth considering an alternative formulation. It's possible that the ABCDE correction in orange actually comprises the 4th leg of the broader A wave, and the recent $8100 low, is actually the 5th leg of that broader A wave. Which means that we are just beginning the B wave of the broader ABC correction, which has a tendency to be a bull trap as it can be quite deep. This could mean that we might see some higher prices first, up to as high as 9k, before resuming the downward trend. If this scenario plays out, it means that the final target will probably be a little lower, perhaps around 7k-7.2k instead of 7.5k.
In any case, we can be sure of one thing: it's going to be a thrilling ride.
Target: $7500
But this is crypto and so we must deal with all the market manipulation and extreme volatility, and try to find our way through the forest and the trees.
As far as TA goes, we seem to be in the 2nd leg of a C wave of an ABC correction. Looking at the above chart, the first A wave of the correction brought us down to $8200. One thing that's interesting is the appearance of a "black swan" truncated 5th leg that stops a little above this low, instead of proceeding past it as 5th waves normally do.
This is followed by the B wave consisting of a triangle ABCDE correction, which is very apparent and shown in orange. Then begins the C wave of the broader ABC correction, in which we have completed the 1st leg, and part of the 2nd leg.
Additionally, the end of the 3rd leg and 4th leg correspond to broad 0.618 and 0.5 fib. retracements which are common reversal/inflection points.
Also interesting to note is that the $7500 target seems to coincide with the broad 0.707 fib. retracement which many traders attach much significance to.
All this suggests a price target around $7500 before we begin a broader bull move, possibly to new highs.
However, it's worth considering an alternative formulation. It's possible that the ABCDE correction in orange actually comprises the 4th leg of the broader A wave, and the recent $8100 low, is actually the 5th leg of that broader A wave. Which means that we are just beginning the B wave of the broader ABC correction, which has a tendency to be a bull trap as it can be quite deep. This could mean that we might see some higher prices first, up to as high as 9k, before resuming the downward trend. If this scenario plays out, it means that the final target will probably be a little lower, perhaps around 7k-7.2k instead of 7.5k.
In any case, we can be sure of one thing: it's going to be a thrilling ride.
Target: $7500
Note
It's looking like we are now well into the 3rd downward leg of the C wave.Note
Beginning to look like the second scenario will play out, where we have a completed A leg of the ABC correction, and we are commencing the upward B leg to the high 8k's, followed by the C leg back down to $7-7.5k. One reason for this view is the lack of valid EW structure in the recent lows of $8200, and $8100, followed by upward price movement that moved well passed those lows, which requires an EW recount. Also, there is RSI price divergence in the last 3 major lows, suggesting downward movement is slowing, and we are reversing.Note
Here is a revised chart showing this increasingly more likely view. Note
Looking like a major bear trap is in play.Note
We may find some support and a possible reversal around $7450 which is the long-term trend-line. Also broad 0.707 fib. retracement is just a little above this.Note
Now looking like $7450 is a possible strong support zone as it coincides with the long-term trendline. In fact, we bounced off it passing $7500 again. Also, fib. 0.707 is a little above this which many traders seem to like as a fib. retracement target. If we convincingly move below $7450, then next stop is probably $7250 (broad fib. 0.764). If we blow passed that, next possible support is 7k (fib. 0.854).
Finally, if we blow passed those fib. retracements, then it looks like we will retest the low at 6.5k, and if we fail to find support there, the we will probably retest the broad low at 6k. I can't imagine going much below that, but never say never...
Note
Large bear wedge suggests a return to the previous smaller bull flag area (seen on 30m timescale) around $7350 or possibly $7250.Note
Target reached, and we shot up into a bull flag around the sub $7500 mark. There is a good chance we'll be going mostly upward for a while as soon as we break out of this bull flag. Short-term target around $7750.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.