In terms of wave count, this is the A Wave which is the first leg of a corrective formation. Often the B Wave is the retrace that establishes a lower high, which is then followed by the C wave which is the deeper and emotional wave the completes the correction. At the moment, the .382 resistance measured from the 7900 high is at the 7000 level. This means as long as price stays below this resistance, this market is likely to continue lower. Keep in mind B Waves often go to the .618 resistance before the C Wave begin.
In recent months, these corrections have been tricky. They have been brief, and the has continued without much interruption. That can happen here also, but I have no intention of buying into this retrace to find out. At this point, momentum is and I expect supports to break, until one of two things occur: price retests a MAJOR and finds enough stability to present a reversal pattern on a larger time frame, or price spends enough time in a consolidation to qualify for stability and potential continuation of the larger . (Like the formation that occurred on early October).
The projected support that I am looking for to eventually be retested is the 6048 area which is now the .382 of the structure measured from the 3005 low. It also happens to be in line with the old resistance that was part of the previous consolidation earlier in October. That is a reasonable completion point which I do not think will be retested in one single leg. It would be a convenient level for a Wave C to complete and I will be watching for that type of price action.
A decisive break below this support, and price may be working its way toward the 4950 area which is now the .382 of the entire structure measured from the sub 100 lows. This level is not that unreasonable in terms of the bigger picture. These are the levels that are within reason BASED on market structure. I know the limits of TA and do not pretend that it provides an absolute forecast of what will happen in the near future, I am flexible and adjust with the market.
In my previous report I wrote about looking for opportunities in the alts, but the main ones, ETH and LTC got hammered in this sell off as well which once again demonstrates the inconsistency of the BTC/alt relationship. BTC goes higher, the alts sell, BTC gets hammered, the alts sell too. So instead of playing victim to it, I just look at each market individually and wait for opportunities to appear while putting much less weight on the BTC relationship. And on that note, the big winner is BCH which is now pushing 1k (very nice call by @goldbug1 on that one). Another great market if you are agile, the funny thing is this one was selling off along with this market until today (I'm sure it's news related).
In summary, my plan has not changed: Avoid this market, look for opportunities in the alts if the levels and formations make sense in terms of risk on their respective charts. If you have the skill and experience to day trade, there is plenty of opportunities to buy and sell these large intraday moves (600+ points in a day is a lot to work with). This sell off was coming, like I wrote previously, the structure was in place. Anything could have sparked the avalanche of sell orders. Being long term on these markets, I am all for buying pullbacks, but the key is not to buy too early. Right now is too early for a larger time frame type of strategy like swing trading in my opinion. Don't be shaken by the drama pouring out of the media outlets. Stay calm, be flexible and most importantly have some kind of plan.
Comments and questions welcome.