Bitcoin market structure of the crash of December 2023

Updated

This post shows an Elliott wave analysis of the crash of the bitcoin market on December 11, 2023, and its recovery.

Note

The market is currently bound into a zone supported by a trend line that has been a strong support of the bull run since October, shown in the chart by the green trend line at the bottom of the chart. Bears should face it, it is unlikely to be broken now, with the trading bias to the upside. The crash couldn’t break it, and there is probably little left in open interest with stops in the area below the trend line.

On the top the trading range is contained by a trend line (dashed red line) that represents the trend before the crash.

The correction from the crash and the consolidation of unfinished recovery waves since has been complex. Only Elliott Wave Theory can provide an explanation.

The market is currently bouncing in what appears as a triangle correction in fourth wave, clearly visible by the red triangle in the center of the chart. This triangle is unfinished and is still speculative. Let’s see what Santa brings for Christmas.

But the projection has to be more upside and a serious attack of the 45000 to 48000 dollar zone.

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The triangle has developed further into a more acceptable or conventional geometry.

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If this interpretation remains valid, wave D is now in progress to the top trend line. D waves can be very deceptive and look very bullish with energy. The are often bull traps, to be followed by a decline into wave E, the end of the correction.

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On a larger scale, the four-hour bar chart, it is becomes increasingly possible that a triangular correction is developing in wave (iv), given the relatively simple structure of (ii), and fulfilling the principle of alernation in Elliott wave theory.

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The two interpretations are not contradictory, at least not yet, because all that matters in the market is structure, and fractal geometry, not the manner it is labelled. The labels are just Elliott’s manner of identifying the market movements.

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Well, it appears this December correction is closing in on its end.
It was an interesting ride.
Many were already celebrating yesterday, thinking the powerful recovery of 3000 points was the bull exit from this area.
But the base of the advance gave a clue that it would be only one of those dreaded D-waves that full traders into an over optimistic mood for a decisive break out. Indeed I kept pushing my second anchor point of the top trend line higher and higher, thinking that if the line slants beyond horizontal, i.e. upward, i would be turning bullish on the day. But the moment of zero slope came and the market turned down again, deeply.
The good news is that wave e was in progress, and that the correction was ending soon.
The chart shows the final shape, with the legs of the triangle correction overemphasized in bold red lines, to stand out from the clutter.

Note

The development of ending wave e was swift and the new day brought a new wave of buying in continuation of the holiday rally of the year.

The green wave lines were drawn last night, after waves one and two told us what to expect.

That ends the correction of December 2023 and this thread.

unbeldi

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