Bitcoin Double Combination Breaking Down (Elliott Wave Analysis)
Updated
Continuing from the last chart that I published, It looks like we just completed Wave (b) as a double combination. The confirmations are the count (zigzag x triangle), the break down of the B-B baseline, the break down out of the A-A Channel, momentum divergences, and the time of Wave (b) being just slightly longer than 1.0 of Wave (a). Also the fact that this channeled so well is a good indication that the whole move is a complex correction and not an impulse.
The implications of this pattern are actually very bullish, that being said we shouldn't retrace more than 80% of Wave (b) on this bear run which will form a c-failure flat (or possibly a non-limiting triangle, depending on if wave (c) is impulsive or not). Since Waves (a) and (b) are so similar in time, it is very likely that Wave (c) will either be much shorter in time (probably 0.618 of Wave (a)) OR much longer (probably the length of (a)+(c) or 1.618 of (a)) and it definitely will not be the same length in time as either (a) or (b). I think that it being shorter is the more likely scenario because that actually puts this time target right on New Years Eve around 11pm EST which I think is perfect because there is suppose to be a lot of news for Bitcoin at the start of 2016. This downtrend will give us just enough room to trap out a lot of bears and get people to close their longs which will help compound the strength of the uptrend once everyone starts panic buying and closing their shorts.
Since this double combination ends with a non-limiting triangle we should not return to the apex of the triangle, if such a scenario occurs it would be smart to close shorts until a new count can be discovered and confirmed. For now, though, this looks like a great place to go short.
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Good luck and Happy Trading!
Note
It appears that my original count is WRONG. This is the best revision that I came up with. The reason why I am now going with this count is because of the Structure labels (pictured here) saying that the Last Five (:L5) actually ended on Christmas, meaning that we ended this corrective pattern on a Flat rather than a triangle, with the move immediately following being the first :5 of the downtrend ie. Wave 1.
Another good indication that my original count is wrong is that what would have been wave 2 retraced further than 61.8% which is very very unlikely (nearly impossible) for a wave 2.
With this in mind it is very likely that we are beginning wave 3 now, with wave 2 being what appears to be a standard zigzag (so long as we do not form into a more complex correction)
The confirmation for this trade is the break down of the Wave 2 channel at which point it may be a good idea to get more aggressive with your shorts because from there we should swiftly reach into the 350 area before bottoming out on this wave 3. This upcoming bottom will most likely not end wave c but it is possible we reach the lowest price here if the following wave 5 is a failure.
Note
(sorry for poor formatting on previous comment)
Note
So the last chart was obviously wrong but that is because we are actually in a much larger triangle, so the overall idea of a very large Flat still stands and we still have not completed Wave (b).
This new count makes the most sense because we have ranged in this price range for so long and still haven't broken the high at 464. It appears that each leg is obviously corrective. Also, the most common way for a double combination to end is with a triangle, and many times the first leg of the triangle is mistaken for a zigzag or complex correction. Finally, Wave b of the triangle appears to be an extended flat which only appear as legs of a triangle.
With all of these factors I have am relatively confident that we are in a triangle of a double combo and that we should be beginning Wave e of the triangle soon, so long as we do not break above Wave a or continue down under Wave b from here.
For time considerations, Wave e should NOT complete in between the red lines (27th-5th) because then it would not qualify as a non-limiting triangle which is what this must be since it is part of a complex correction.
I am HOPING that this ends before the 27th because then we should start dropping within the next 2 weeks, otherwise it could take up to a month to drop down because a lot of the time non-limiting triangles have congestion right into a very near the apex. If the latter situation occurs it will be an extremely boring market to be watching up until the point that it breaks out. My argument for the former situation is that if Wave e is similar in time to a, b or c then it is very likely to end before the 27th. Anything could happen, and it is always best to wait for the confirmations before making any definitive statements.
Trade closed: target reached
Too much sideways. Close enough to my target. Locked in about 600% profit. No trades from here.Note
As i mentioned before there is a possibility of a triangle, however, a Limiting triangle actually seems a lot more likely than a non-limiting because you rarely if ever find non-limiting triangles in the Wave 2 position.
That being said, since this *possibly* a limiting triangle there is very limited upside on this run. Also since it appears to be forming an abnormal limiting triangle the following impulsive wave should complete a major pattern meaning that an x-wave is unlikely to follow Wave (c). If this pattern turns out to be correct, which we won't know for sure until much later, the implications are very bearish possibly bringing us back down to 230 or lower.
For now I'll be focusing on trading on a lower timeframe since trading inside of triangles tends to be tricky and it will be safer to just scalp longs until the pattern is confirmed by breaking out of the B-D trendline.
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