BTCUSD Perspective And Levels: Larger Correction Likely.

BITFINEX:BTCUSD   Bitcoin / U.S. Dollar
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.

Comments and questions welcome.
Marc Principato, CMT |Author: Analyze Any Financial Market Like The Pros Using Price Action| | Cofounder (S.C.)

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.
it is nearly the time of the alts.
Yes, I think btc wont suspass 6500. 6.478 the new ATH.
What do you think about the possibility of BTC spiking to 7k at this moment before the fork?
MarcPMarkets GabrieldeAssis
@GabrieldeAssis, you know anything is possible, but I am seeing more bearish action right now than bullish.
A break below $5100 level seems highly unlikely to me, but I would love to see it. Looking at the current price on a 200 moving average, it's shockingly not too frothy. If it were to get frothy, we'd see price well above 10k IMO. Staying out of this market is more risky than staying in it.
@Saylo, thanks for sharing.
Thanks Marc! In hindsight, it's clearer now why the previous correction in Sept. seemed like only 2/3 of a correction, and caught so many wanting for more. I really thought we had finished the 5th wave as well, looking for all sorts of ways to rationalize an ABC extended correction, until it became untenable, and too late. <Sigh>
@dalmazio, that is why critics criticize Elliott Wave, and that is also why I do not rely on it alone. When the counts stop making sense, I resort to support and resistance until the counts make sense again. At the moment the BTC count makes sense.
+1 Reply
dalmazio MarcPMarkets
@MarcPMarkets, great advice. Thanks.
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