As I'm sure a lot of you are aware, technically, there are many similarities between the 2014/2015 bear market and the current 2018/2019 bear market cycles but there is plenty of debate going on as to where we will actually end up bottoming.
Many analysts are calling for a bottom close to $2500 as this fits the 2014/2015 bottoming criteria on the weekly chart where, like in Jan 2015, we would again find support at the 88.6 fib retracement level ($2400), however, other credible analysts are calling for a more turbulent capitulation and a bottom closer to $1000.
There seem to be 3 camps of bottom-callers:
1) The "we have already bottomed" analysts who think $3157 was it and it's only up from here. 2) The $1800 - $2500 bottom-callers 3) The close to 1K bottom-callers
Personally, I think we will have a strong bounce from all 3 levels but we will probably eventually bottom below 1K in August/September later this year, when true capitulation kicks in.
If we are following the same pattern as the bear market in 2014/2015, then recent flash crash to $3400 on Tuesday might have been a temporary double bottom and we might actually be heading through our daily SMA50 to potentially test our daily SMA100 instead as the herd slowly fomo when they start believing the bottom was in at $3157.
In the blue-shaded ellipses, we have our 2018 downtrend to our 6k support and our 2014 downtrend until July where we broke minor uptrend support. Notice we also had a minor uptrend before we broke that 6k support and fell to our current $3157 low which is reflected in the yellow ellipses.
If we continue following the same pattern as we did in 2014, as per the yellow shaded ellipses, then we should manage to get above our daily SMA50, which has been our most recent resistance and is currently sitting around $3690, and we should have a rally soon to somewhere around 5k, potentially up to $5200 depending on the level of fomo as the "we have already bottomed" bottomers pile in. Good to see that we've managed to get back above $3550 for now. We currently have strong bullish divergence on the 12 hour MFI and RSI, and should be retesting our daily SMA50 resistance yet again.
This is where we'll test our daily SMA100 as resistance for the first time since October 2018. This will also be a 161.8 fib extension of our recent wave up between $3157 and $4273 in December 2018 where recently we had a 61.8 fib retracement afterwards.
We should then get rejected by the daily SMA100 and crash back through our 3k support (when the herd realise that's not the bottom) to our temporary bottom between $2150 - $2400 where the second camps of bottom-callers will be waiting with their buy orders. There will be plenty of liquidity at these levels for a strong bounce as the herd will again believe that this is the official bottom, only to repeat the fomo yet again, with an upper limit of our 4k-4400 resistance.
This is where we will drop and true capitulation will take place as we slice through that 2k support like a hot knife through butter, then the 1K, finding support somewhere around $800. This is where we will revert back to the initial uptrend of the prior bull cycle and a new market cycle will commence from there.
The herd will be shocked as expected but this will be the true despair stage of the market bubble.
Good luck and happy trading!
2014/2015 Bear Market Cycle:
2018/2019 Bear Market Cycle:
Comment
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Bullish divergence on 4H RSI. Large move up expected, to clear a lot of shorts.