1. We have hit resistance on price at the upper border of the .
2. Daily has also hit resistance at the top of its .
3. We have just got the fabled "death cross" which is a crossing of the 50 and 200 EMA's.
The next logical step is rejection, followed by a dump that should take us back to the bottom of both , giving us a completion of our C wave. We then should have one more push up (D) followed by a last dip (E) before we breakout.
Because both price and are forming falling , we can assume that we will EVENTUALLY get a nice breakout. Whether this will be the end of the correction or simply a bounce upwards before further downside is yet to be seen. The key takeaway here is that we are at what I believe to be a high point for the next few weeks. I have opened up massive short positions here and have sold all my alt holdings.
If you would like me to keep posting updates to this idea, please LIKE it, so that I know people are interested in following along. I will use wave counts to highlight targets as we near both edges of the and as we come close to completing our C, D, and E waves.
As always, this is for educational purposes only and should not be taken as financial advice. Do your own research!
Our C wave will likely end at sub 6k levels before we get a small bounce which will be our D wave.
As can be seen in the previous chart I posted above, this leg down we are seeing is the 3rd subwave of our wave 3 (or C wave as referred to in the original chart posted) and should take the form of a 5 wave impulse. What we are seeing now with this bounce is subwave 2 of 5 of this impulse. Using fib levels, we can estimate where this subwave 2 will end, and where the drop down will resume. In the chart below, I have marked the 38.2%, 50% and 61.8% retracement levels. It is useful to know that wave 2 corrections most commonly retrace 50-61.8% of Wave 1. Noting that we have already surpassed the 38.2% retracement, we can see that our most likely target will be somewhere in the 50-61.8% range, which is right about 7k.
Once we complete this wave 2, we begin wave 3 of the 5 wave impulse. Wave 3 is often the strongest of the impulse waves, so this next push down should be even stronger than the one we just experienced (from 7.5k-6.7k).
I am still holding all my short positions and am up about 10% at the moment. Will add more short positions at around 7k levels to catch the wave 3 down.
At that time we had NOT surpassed the 38.2% retracement, we had surpassed the 23.6% retracement. My mistake!
Rising wedge on hourly RSI, and the fact that we are nearing the apex of this pennant, makes it clear a breakdown (and Wave 3) should be happening shortly.
Hidden Bearish Divergence- indicates weakness of a rally. Commonly found during retracements of downtrends, and a sign to "dump the pumps". Currently on the 15 min timeframe, but I have a feeling we will see it on the hourly soon as well.
It is important to note that divergences don't necessary indicate that a reversal will happen immediately. Sometimes with bearish divergences prices can run higher for a bit before turning down, and sometimes with bullish divergences prices can go lower before turning up. I think we will test the blue downward sloping trendline above us, reject it, and then dump hard.
Bearish divergences everywhere! We have bearish divergences on the 15 min, 1 hour, and the 4 hour time frames. We do have a symmetrical triangle forming on the 5 min and the measured move takes us to $7200 levels, however, that is the only bullish sign left. Volume has failed to increase, momentum is fading, and bearish divs are appearing on all time frames. I think this push to 7200 levels will be our last push up before we start dumping again.
We didn't quite get to $7200 as bullish momentum from the triangle breakout was only strong enough to take us to $7170, but the dump that resulted has just begun.