... or how Tyler Jenks “hyperwave theory” could still become true
Even if it's not relevant for our own trading method, we were asked to take a look at the most bearish scenario the chart 'has to offer' right now. Lo and behold - the following screenshots clearly indicate that there's of course a chance for lot more downside in the market.
The journey starts by looking for similarities as you know, history might not repeat itself, nor predicts the future, but it likes to rhyme nonetheless. Some of the most glaring information you could get played out on the weekly chart, home to the often cited 21 moving average. In conjunction with the 50 MA you can’t help but think that the story of 2018 and 2019 has all been about breaks, failed rallies and the ominous death cross between these two.
Once the 21 MA got broken, it has been followed by a failed rally that led to a test of the 50 MA before once again trying to turn the tide in a sucker rally. The following retests of the 21 MA and 50 MA respectively led to a bigger triangle formation which resulted in massive capitulation dump of its expected measured move – now there you have it: The Story of 2018.
Now compare that to the moves made in 2019 and yes, we had a very nice corrective one to the upside, but only to put in very similar breaks and retests of the mentioned averages.
In fact, the only thing missing is a death cross with a potential for more downside.
To be honest, by purely looking the chart it doesn’t take much to make this death cross happening which could once again play out in a descending triangle formation. The measured move would hit the current area of approx. 3.5 to 4K. Double bottom?
Keep in mind that in order to fall so heavily we’d need to slash right through the 200 MA on the weekly, which has been formidable support in the last couple of years. But slashing through and creating a massive tail is nothing out of the ordinary. What is also interesting, is the fact that we not only go back to a massive liquidity gap formed by the pump on April 1st 2019 but would also retest the price range where we broke the trend line of 2018.
Nobody knows the market sentiment and ever since BTC seemingly becomes tamer through margin trading, it’s unclear how violent the moves could become. But let’s just assume BTC not only finished a bigger Elliot Wave formation but also is forming the next and then final descending triangle as you can see in the chart below – it wouldn’t be out of the ordinary to failing the support in the low to mid 3K area.
Going back and retrace by up to 90% (in our case to a low of almost $600) has been the story of so many markets before and after Bitcoin. Even though there’s a lot of traded volume on the way down that could easily come to BTC's rescue, one cannot be surprised or caught off guard once we see these formations happening.
If this hyperwave theory of the late Tyler Jenks comes to fruition - this might be it: the most bearish scenario out there. Anyway, and leaving you on a higher note – volatility is king and guarantees profits more than anything else, if you know how to trade an asset class with conviction and a plan.
Happy Trading
Even if it's not relevant for our own trading method, we were asked to take a look at the most bearish scenario the chart 'has to offer' right now. Lo and behold - the following screenshots clearly indicate that there's of course a chance for lot more downside in the market.
The journey starts by looking for similarities as you know, history might not repeat itself, nor predicts the future, but it likes to rhyme nonetheless. Some of the most glaring information you could get played out on the weekly chart, home to the often cited 21 moving average. In conjunction with the 50 MA you can’t help but think that the story of 2018 and 2019 has all been about breaks, failed rallies and the ominous death cross between these two.
Once the 21 MA got broken, it has been followed by a failed rally that led to a test of the 50 MA before once again trying to turn the tide in a sucker rally. The following retests of the 21 MA and 50 MA respectively led to a bigger triangle formation which resulted in massive capitulation dump of its expected measured move – now there you have it: The Story of 2018.
Now compare that to the moves made in 2019 and yes, we had a very nice corrective one to the upside, but only to put in very similar breaks and retests of the mentioned averages.
In fact, the only thing missing is a death cross with a potential for more downside.
To be honest, by purely looking the chart it doesn’t take much to make this death cross happening which could once again play out in a descending triangle formation. The measured move would hit the current area of approx. 3.5 to 4K. Double bottom?
Keep in mind that in order to fall so heavily we’d need to slash right through the 200 MA on the weekly, which has been formidable support in the last couple of years. But slashing through and creating a massive tail is nothing out of the ordinary. What is also interesting, is the fact that we not only go back to a massive liquidity gap formed by the pump on April 1st 2019 but would also retest the price range where we broke the trend line of 2018.
Nobody knows the market sentiment and ever since BTC seemingly becomes tamer through margin trading, it’s unclear how violent the moves could become. But let’s just assume BTC not only finished a bigger Elliot Wave formation but also is forming the next and then final descending triangle as you can see in the chart below – it wouldn’t be out of the ordinary to failing the support in the low to mid 3K area.
Going back and retrace by up to 90% (in our case to a low of almost $600) has been the story of so many markets before and after Bitcoin. Even though there’s a lot of traded volume on the way down that could easily come to BTC's rescue, one cannot be surprised or caught off guard once we see these formations happening.
If this hyperwave theory of the late Tyler Jenks comes to fruition - this might be it: the most bearish scenario out there. Anyway, and leaving you on a higher note – volatility is king and guarantees profits more than anything else, if you know how to trade an asset class with conviction and a plan.
Happy Trading
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