BTCUSD update: Zooming out and looking at the bigger picture always provides important clues as to what price is more likely to do in the near future. In this analysis I am reevaluating the Elliott Wave count in light of the most recent support and resistance levels. The next wave that is most likely to unfold is a bearish one and can take this market back into the mid 4000s before reaching for new highs.
As I have written about before, I always perform Elliott Wave analysis but I do not always write about it. The reason is simple: I do not want to confuse my readers, so when information is clear and makes the most sense, that is what I write about. Whether that is talking about Fibonacci levels, wave counts or other relevant levels chosen by the market.
Right now in this market, the wave count is worth highlighting. The reason is this: the market just wowed the world with a breakout above 6k. It went slightly higher and then pulled back to a minor support. Enthusiastic buyers who want in will see this as an opportunity not to miss the BTC train to 7k or whatever new number the hypsters are hyping about and it is a trap. I will refer to Elliott Wave to further explain.
Going back to earlier this year and recounting the waves puts the current rise into much better perspective. And as you can see on the chart, the sell off that occurred in the previous month was the Wave 4 that I was expecting to unfold further at the time. The market proved me wrong and with the new upleg in place, there is a clear count with a recent high completing 5 subwaves of Wave 3 of a larger 5. When 5 waves complete, often a correction follows, and the coming correction in my opinion is a Wave 4 retrace that can take price back to significantly lower levels. The first support is the .382 of the recent bullish structure which is the 5159 area. A break below that, and price can possibly retest the 4526 to 4073 support zone which is the .618 of the recent bullish structure.
Corrections typically unfold in 3 waves, A is the first retrace, B which can actually take this market to a slightly new high, and then the infamous C Wave which is often the emotional sell off that scares everyone out of the market. The good news is after this Wave 4 completes. then there is the expectation of Wave 5 of 5 which can possibly take this market into the 6500 area (which happens to be the 2.618 extension measured from the low of this wave). Also Wave 4's are often the most predictable wave because 3 waves need to be in place first (which they are). The upcoming forks may serve as an appropriate catalyst to help Wave 4 unfold, also remember a bearish surprise can come out of no where and trigger the persistent selling as well.
In summary, this wave count offers a possible road map as to how price is more likely to unfold in the coming week(s). How is this helpful? Well it tells me not to take any longer term positions at these levels for one, and to keep my profit expectations low if any long setups do occur on smaller time frames. Remember this is just an idea based on the structure that the market is presenting at the moment. I will be using this as a reference to be prepared for the Wave 4 low and reversal. I will also be watching for bearish confirmations along the way and if they don't occur, then I know this wave count carries less weight. And just to be clear, I am not shorting this market, just waiting for the next buying opportunity.
I respectfully disagree with this count. Even on your on this graph 2 alternative counts are visible and more obvious than this one. I beleive right now we are to see a wave 5. We have 5917-5072 being the wave 4.
dnldnz
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Mark, I asked this before, but could you please explain the rational behind not shorting a market that's bound for a big correction?
BrunoDanteSampaio
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@dnldnz, I think it's like this because of the long term investment profile of some securities.Maybe he has some % that he doesn't want to touch for the next 5 years... But I don't know, Im also starting and I will sell some % of my long term coins whenever I had a good profit and when I feel the market is about to face a deep correction.
dnldnz
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@BrunoDanteSampaio, what about margin trading? You can short a market without touching your core investments.
BrunoDanteSampaio
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@dnldnz, hm, don't know much about it, I will make my research and study it;)
Thanks for your comment, appreciate it
Cheers!
dalmazio
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@dnldnz, one explanation is volatility in conjunction with timing the correction. Crypto is so crazy volatile, that it's all too easy to get stopped out. And if you add sufficient leverage to that, and don't have tight stops, you could get wiped out. Not to mention the frequent fakeouts. IMHO, unless you have a penchant for extreme risk, and like living on the edge, it's just not worth it. But each to their own.
@dnldnz, I do not trade on margin so I can only trade one side of these markets which is fine with me. I know what margin does to accounts, and these markets are nuts. To short them, you have to monitor them 24 hours a day since they are open 24/7. I''d rather not, and keep things simple.
imkeshav
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Thank You very much for this analysis. Based on your previous predictions I decided to make a big move into cash (BTW 80% of my Crypto holdings were purchased less than 10 days back...victim for major FOMO). I liquidated 40% of my portfolio of mainly BTC into cash and BCH/ETH expecting that both of these coins were quite close to the bottom relatively. However, if BTC crashes or corrects, will it take all the coins down with it even if they are ready for an upward move as BTC drives the market. If yes, isn't it prudent to move most of my holdings to cash as it was a recent purchase or should I just hold. My portfolio is 10% down at this moment.