Earlier this year I outlined 4 possible scenarios (see chart link below) of which the 1 & 2 were theoretically possible but did not really feel high high likelihood of developing. I then explained this in later February in live webinar. This leaves us with 3 & 4 which in general are similar except where the upside correction ends and if there was just a single at the time or as it now appear a double in prospect.
In subsequent published chart (see link below),I outline a possibility that as long as we held above the minor rising and 380 it has a chance of moving up to 480 – 500 area.
So now that we held the 380 and minor up referred to above breaking above 500 I think the price action is little more clearer which I present here as follows:
1. Taking a look at the price chart with 3 day period, note the double decline from Nov 2013 to Jan 2015 low appears to have completed larger . From where we are progressing in possible double retracement move to the upside shown in up trend channel.
2. On Second chart also of 3 day period, we can see interesting price interacting with the Schiff lower parallel and 50% line of the median and lower parallel shown with wave count in which we are progressing in second minor of wave ((y)) which commenced from low of 16th January and in final swing wave “c”.
3. If the above is true then we could have full 5 wave move with the wave 1 close to completing in the area of 550 being approx of the entire decline from Nov 2013 to Jan 2015.
4. On this 3 day time frame chart we also note possible divergence could develop in the and even .
5. On the daily time frame chart above, you can see that we have minimum requirement in that wave c is close to completing minor 5 wave and could top out in the 550 zone noted above. However, provided we hold above $490 - $500 level, I think it is more likely, that we will get full larger 5 waves which could lead the price to peak around $670 and even spike into 700 -720 area.
6. This double completion would open the prospect of another large reversal that could result in decline to 200 -220 area though more likley to go and retest the Jan 2015 low or make new lower low.
Other features and details are explained in:
Youtube video link - https://youtu.be/0V6-QYfus_I
Google+ Link -
Conclusion: Provided we hold above $490 - $500 zone on pull, look for larger 5 move up to nest Fib level ( ) at around $670 with possibility that spike high could form into $700 - $720 area.
Therefore in the intermediate term a bias appropriate.
Warning: This is my interpretation of price action using TA approach that I consider helps me the most but could be completely wrong. Therefore as always, do your own analysis for your trade requirement and ignore my views.
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The basis of structure required to suggest a new bullish cycle of impulsive nature from EW point of view starting from Jan 2015 low simply do not exist. That will have to wait till sometime later and this entire rise is a retracement of the decline from Nov 2013 high. So I agree with you on that. Will monitor with interest.
As comparison please look also at one of your silver charts:
Based on EW theory and the way you explained it in the Bitcoin chart and your new video, this structure in the Silver chart, leg to could it also be your triple zigzag scenario?
Silver also did a significant consolidation in the area of 4 tot 6 dollar (1990-2003) and then started the run to 49 dollar.
In theory then, when I look at this Silver chart and the structure of the to leg, could it be possible, as in the Silver chart, that the Bitcoin does a new ATH after a significant retracement after the halving and the end of the double zigzag?
Because in the chart and video you explained the triple zigzag to stop in the area 800 or above. And not take out the ATH of Nov.2013.
So is it possible, as in Silver with the to leg, that we first go to the 650-700 area, do a retracement to the 450 area, and then do the final zigzag of the triple zigzag to above the Nov 2013 high?
If possible from an EW perspective and if it plays out, a decline to 200-220 or a new low to 150 area or even to 60 area as you explained, is less likely. See also the retracement leg to in Silver chart which followed after completion of .
It is more a Cup and Handle pattern in the Silver chart.
Also, even when we do not take out the ATH of Nov. 2013 in a triple zigzag, we could form a big triangle as you showed here:
So taking into account these two additional scenarios, the (1) Silver chart tripple zigzag to new ATH,
and the (2) big triangle pattern with a high in the area of 900-1000 after ending the tripple zigzag, what is the likelihood you see these two alternative scenario's playing out from an EW perspective and recent price information?
Or do you still prefer the decline to 200-220 or 150 low or even lower to 60, based on arguments you explained in the chart and video?
Thank you for the analysis.
What I mean is the structure of the leg 2 to 3 in the Silver chart. I can see a triple zigzag there forming a new high. Is that possible for Bitcoin too, based on your analysis.
There are many potential variations and to some extent, its almost impossible to accurately predict corrective price action so far in advance. In theory yes, we could attain New ATH and still be in corrective phase.
Concerning your question on double or triple zigzag in Silver, I don't have readily available price data beyond what is available on Tradingview showing historical data from 1970.
In my analysis of Silver chart, I started from the low in 1993 and noted that the move up into 2011 high is in double zigzag. Not the normal 5 wave impulsive count in bullish cycle. This is not necessarily a corrective cycle (ie correcting the price decline from 1980 to 1993 low).
Rather a part of an impulsive progression (normally seen in the final 5 wave cycle at the end of the trend (such as ending or expanding diagonal). As it is exhibiting a double zigzag (each with double zigzag at lower degree waves), I initially thought that it could be a part of an ending diagonal of some sort. So there are 2 possible options to fit Silver at this cycle degree as follows:
1. That we have a zigzag wave leading into 1980 high. If so, then that could be and 1993 low could be wave with resulting swing high in 2011 as , followed by decline in to 2015 low as possible wave and now potentially progressing in wave which could develop in to a zigzag to complete the entire cycle spanning over 50 years as a massive rising wedge as shown in schematic diagram and also actual price chart using closing prices only.
Here are these charts with the details.
2. That the peak in 1980 is actually a 5 wave cycle (rather than assumed above as zigzag) and then it could be top and 1993 low as wave . If correct ,then from that low, we have potential wave in progress in the form of 3-3-3-3-3 and 2011 could be minor wave 3 top with 2015 low as wave 4 and now could be progressing in minor wave 5, but the entire cycle of 5 waves commencing from 1993 low is developing an Expanding Ending Diagonal (Megaphone), which also could complete a major top of larger 5 wave cycle spanning over 50+ years.
Here is the chart with the details -
Of these 2 possibilities, rising wedge as in 1 above is more conservative in terms of likely upside. Where as the second one being that of Megaphone as more bullish as it leave the final zigzag with potential to go much higher.
Regardless in terms of initial forecast we still arrive at similar out come. Though on reflection in Silver we could very well be developing the second option that of Megaphone (expanding Ending diagonal).
However, this is very different from what we see in the Bitcoin in that we either have major wave 3 at Nov 2013 high, in which case we are in wave 4 correction and once completed could expect to move up in wave 5 to retest ATH or make new higher high.
The Nov 2013 high is a major top of 5 wave cycle being completed in what could be top of Wave of larger degree and that we are in wave retracement. In either case it is theoretically possible for corrective waves to make a new ATH, if it took the form of expanded or running flat like the ones shown in schematic diagrams in the chart. In blue showing Expanded Flat with wave B making a new high before dropping back to wave A low or beyond. The magenta showing Running Flat where wave B could make new ATH but wave C fails to come anywhere near wave A low.
In addition to a normal zigzag and 3 variety of Flats (Regular, Expended or Running Flats), there is no way of knowing in advance which one will eventually play out. They become more apparent with passage of time providing more data on the chart as is the case with any technical pattern, they become recognisable the more they develop.
General ideas of expanded and running flats are illustrated in the chart snapshot.
The final alternative is that we make assumption that Nov 2013 high is top of larger wave 3 and we are still in correction phase for wave 4 which could take the form of massive contracting triangle as the one I sketched some while back which you referred to (this was not to scale, just a sketch to illustrate the point. There is nothing at this moment in the price charts to suggest that is has any chance for developing but in theory remains open till proven otherwise.
Therefore, the question arises for Bitcoin is which of the 3 possible flats or alternatively a triangle will eventually form. Right now there are no definitive indication of any of these. Yet as an analyst one has to come up with higher conviction possibility to forward.
In that context, I have discussed a possibility in early 2014 (shared in live webinar at the time and several snapshots in subsequent publications), that the Nov 2013 high might have completed a larger 5 wave cycle which could form top of wave 1 of higher degree.
If that is the case, then what we are retracing is not wave 4 of larger cycle but wave 2 of higher degree which are notorious for the both deep retracement as we have already done with Jan 2015 low and extended time. However since the Jan 2015 low, we do not have impulsive wave structure to date. So currently bounce could be wave X or B, which could in theory form new ATH, is very unlikely.
Consequently, with all the forgoing and my correlation chart of SPX500 (see chart below) leads me to conclude that we are likely to develop a double zigzag correction as presented in the main charts and Youtube video. Of course this could change with additional price data as pattern evolve.
Apologies for rather lengthy reply but hope it explains why it is almost impossible to correctly predict which of these scenarios will play out relatively at such early stage. Patterns could only become very clear in late stage of development or upon completion. I have proposed the one possibility which I feel has higher probability as I see it based on what is available right now in terms of price data.
My reasoning is something like this:
That the Nov 2013 high might have completed a larger 5 wave cycle which could form top of wave 1 of higher degree.
Then it could be top and Jan 2015 low as wave 2. If correct, then from that low, we have potential wave 3 in progress in the form of 3-3-3-3-3
and end of 2016, early 2017 could be wave 3 top.
That is also basically the structure in your Silver chart here:
So, the first double zigzag to form Wave W in Brown in your Silver chart is point W in blue (317.99 high of 12 July 2015) in your Bitcoin chart.
Point X in Brown in your Silver chart is point X in blue (198.12 low of 25 August 2015) in your Bitcoin chart.
First Small (w) of double zigzag to form Wave Y in Brown in your Silver chart (8 dollar area) is point w in brown (502 high of 4 November 2015) in your Bitcoin chart.
First Small (x) of double zigzag to form Wave Y in Brown in your Silver chart (6 dollar area) is 294 low of 11 November 2016 in your Bitcoin chart.
The consolidation in 2005 in area 6-8 dollar in you Silver chart is the consolidation from Nov 2015 - May 2016 in your Bitcoin chart.
Now we did a break out in Bitcoin and Bitcoin could complete the double zigzag structure like forming the Wave Y in Brown in your Silver chart (wave 3 top).
Is that a possibility or are there errors made in this way of reasoning from perspective of EW theory?
In silver, as I mentioned that I don't have data prior to 1970. So not really sure if it is a zigzag or 5 wave to 1980 high. If it is 5 wave leading to that high, then it would be wave and not . In both of these curcumstances, the bouble zigzag would fit the move from 1990 low to 2011 high.
Regarding Bitcoin, if we have rising wedge formation which is 5 wave structure and appropriate for it to form larger wave 1. However, then if the Jan 2015 is bottom of wave 2 then the price of the low would be wave 3 which would also shoulf be of 5 wave structure and zigzag do not fit that development.
Hope this helps.
I can't seem to find the weekly silver chart shown above (published May 30 2016)...has it been removed? In any event, I'm pretty sure we can call the 1980 top a supercycle wave 3. You may find this site useful when looking for the larger degree of trends - <a href='http://www.macrotrends.net/1470/historical-silver-prices-100-year-chart'>Silver Prices - 100 Year Historical Chart</a>. I use it whenever I need to know where we are on the grander scale of things...hope it helps.
The upshot of this leaves us, I believe, with 3 general choices for what has occurred since the 1980 high: (a) we've had a supercycle wave 4 low in late 2001, a wave 5 high (2011), and currently retracing....or....(b) the move down and subsequent up move from the 1980 high is an irregular flat, which would mean we are currently in a 5 wave move down....or (c)...the 2011 high was just wave 1 of cycle degree in an astronomically large supercycle wave 5. Of these, I believe (a) would be considered a moderate expectation, looking for a b-wave high in the $27 - $30 region followed by a c-wave low near the bottom of the wave 4 low around $9. Scenarios (b) and (c) would be extreme views with ultimate targets of around $4 for (b) and god-knows-how-high for (c).
The moderate count might look something like this. I'd really appreciate your thoughts if you have time...
Regarding 1980 high in Silver could well be major cycle wave 3 and in that case we are progressing in wave 5 if the super cycle degree. Many have concluded that the 2011 completed that cycle and that we will now spend another decade of more in bearish cycle. Well that will become more clearer with additional data in time.
Turning to you chart, you could be right with the labels, though I am not sure about wave I which seems to lack clear discernible internal 5 waves and looks more like 3 swings. Similar observations could be made for wave V with internal waves 3 & 5 in circles. So it most likely be double zigzag as I suggested and would make perfect sense if you take into account the 1993 low where we have possible expanded ending diagonal and that we could have completed wave iv of 5 and could be progressing in wave v or 5. Or will do soon if the wave 4 is still in progressing.
Here is a chart snapshot with labels http://www.screencast.com/t/cOzkzKbopsx
on chart downloaded from <a href='http://www.macrotrends.net/1470/historical-silver-prices-100-year-chart'>Silver Prices - 100 Year Historical Chart</a>
Thanks so much for your reply Dan, I have great respect for your charting! All the best, Andrew
I still don't quite understand from your post why you are of the opinion now that a similar megaphone pattern for Bitcoin, like you charted before, is less likely.
4 months ago you posted it here as a possibility, a scenario for 2016-2017:
What is it, based on recent price information, that did change your mind about the likelihood of this scenario?
Based on how the consolidation between November 2015 and May 2016 in Bitcoin solved and broke to the upside, in theory I can see a similar pattern develop for Bitcoin as Silver did in the period 1991 low to 2011 high. See the chart above.
Or do I miss something here?
It's not about being bullish or bearish, but I only try to understand the reasoning behind the two patterns.
Thank you very much for your time and analysis.
The snapshot you posted looks like one-to-one as the weekly chart of Bitcoin (logscale). Similar labels could be put on the weekly Bitcoin chart.
Therefore, I also considered this megaphone scenario for Bitcoin likely, like it did in the chart for Silver.
But maybe I'm wrong in my thinking and analysis. I'm no expert in this.
Thank you for this snapshot!
In the Webinar I presented in late Feb, I discussed these and explained at the time that whilst all 4 were still valid, the Triangle one was the least likely to develop, mainly because the Triangle is very disproportional having such a big leg down to January 2015 low as (a) compared with subsequent waves (b) to (e). Triangle idea was only considered as possibility since many have continued to suggest that Jan 2015 low is the major low which had ended the bearish cycle from Nov 2013. The price action since has broken out above the point (b) and invalidating that for now. Only the larger triangle we noted above in our discussion here remain as a possibility, and future price day will help to clarify if that become stronger possibility.
The Megaphone pattern has higher possibility as things stand at present, when compared with the triangle and likewise more data will show it it becomes a reality.
However, in both of the Triangle (including the much larger one refered to above) and Megaphone patterns, it is a requirement that the November 2013 is wave Major wave 3 top, since triangle only appears in wave B or wave 4 position and Megaphone only appears in Wave 5 or Wave C.
There is not enough data to be absolutely sure if the November 2013 is the wave 3 or not. If I consider the chart suggesting 5 wave move to November 2013 in the form of rising wedge then neither the triangle or megaphone would fit.
So for now in absence of impulsive wave counts of the January 2015 low, you have to work on premise that we are still correcting that decline and would likely reverse upon completion. Though keeping other options in the background to review should price action supports them.
In conclusion, the above published chart wouldhave become very long and hard to navigate, or get the sense of what I was trying to convey, if I added every possible options when it was only addressing intermediate term analysis.
Also to keep in mind that any patters we feel we detect could evolve and change to something else. So I will be happy to review these and update them when it become necessary.