I've been trying to narrow down where exactly BTC will land as the next local bottom comes in.
In my view, BTC is currently printing a second seven-wave crash structure, completing an ABC correction in what, for me, is Wave 6 down in a seven-wave ascent to its blow-off top at 80k.
$41,496 has been emerging for me as a key line of confluence (see linked analysis).
But here I thought I would reverse engineer the Fibonacci sequence and see what $41,496 reveals if I place it both on the 0.786 in a downside direction, and the 0.618 in an upside direction.
We know where the last local top is, at $64,977, so where is 0 and 1 in these Fibonacci sequences?
Interestingly enough, 0 in the upside direction for the 0.618 is precisely on the low of 11 March 2020. So this moment marks a return to the golden pocket of the entire bull run to date.
1 for the downside direction is on $35,182, right in the middle of the bull flags of the January correction, and aligning with the 34 on the weekly.
If BTC does in fact bottom on $41,500, the April-May correction would have come in at -36%. This would align, for me, with the seven-wave structure, as Wave 6 down should be deeper than Wave 1 or Wave 3. BTC should then embark on Wave 7, within which the seven-wave structure is repeated.
Wave 7 should be most parabolic of the seven-wave structure.
NOTE: None this assures that 41.5k will be met. I could be wrong, and BTC may go deeper, or not get there at all. It's just the level I'll be looking out for.
Feel free to comment.
BTC has so far reached and just pushed through 0.702. And BTC does love that level. Below is the 0.786. Might the base already be in on the 0.702? It's possible. I'm holding out for the 0.786.
1) From the most simplistic starting point, we have a 0.5 Fibonacci retracement from the 14 December 2020 breakout above the previous ATH.
2) From a monthly perspective, we have a massive bull flag.
If we drop down to the weekly timeframe, that bull flag encompasses the range BTC has been in since mid-February.
I don't see that bull flag playing out to the dollar, but the potential is there nonetheless for a $100k+ BTC.
3) Baseline on the Ichimoku cloud currently at 40.5 on the weekly.
4) BTC currently tapping the 200 EMA on the daily.
6) Until now, I'm assuming that we're close to the bottom, and that for the purposes of a local Fibonacci this aligns with the 0.786.
7) In terms of the candle body, this last candle on the 10-day chart is almost certainly going to close lower than the 20 February 2021 candle. As such, for me, the seven-wave structure to 80k remains in play.
8) Dropping to the lower timeframes, we've been looking to see Wave C of an ABC corrective structure play out. This is Wave A.
It was an open question for me whether we should be seeing a double-tap retest of the base or not. It is to be expected in Wave A, as the whole correction is still in play, with downside pressure. But as Wave C comes in, it sometimes will not happen, because the base marks a reversal point.
9) This is Wave B.
10) This is Wave C.
We could make a rough projection of the base by placing the 0.786 of a Fibonacci sequence on the bottom of wave 5 within Wave C. This established 43k as a zone of interest.
11) As it turned out, and unlike for Wave A, the Fibonacci for wave 5 of Wave C fell between the 0.702 and the 0.786, at least so far. While Wave C is always equal to but sometimes greater than Wave A, we could also measure Wave A in percentage terms to establish confluence in terms of a zone of interest.
12) Dropping down to even lower timeframes, we could track the unfolding of Wave C. It is a seven-wave crash structure within which, in the seventh sub-wave, the seven-wave crash repeats, and the same within the seventh wave of that sub-wave, and so on. This is what I was looking at this morning, practically down to the 1m chart.
13) What you look for is for a series of sevens to complete together. This should then mark the base of Wave C. In reality, as you get down to the lowest timeframes, the wave structure distorts and it does become difficult and somewhat subjective where you place the wave count. So while it's an interesting exercise, and while I think traders should not use the lowest timeframes only to time entries, it's certainly possible to get lost down there, as the sevens within sevens play out.
14) At first it appeared there was a break of structure this morning, coinciding with another tweet by Elon Musk. An expected roll up of the local wave 6 formed what appeared to be a breakout candle. But this is perhaps a good example of how, when looking at very small timeframes, it's good to keep an eye on the larger ones too. Because looking at this now, I think this wasn't a break of structure after all. It was simply the printing of the last bear flag.
15) You can see more clearly the correspondence between Wave A and Wave C if you zoom out. What happened this morning appears to be simply a backtest that perhaps has just completed.
16) So is it over? Tentatively, it does appear so to me. But we'll only really know if and when BTC clears at least 51.6.
If that is the case, we'd be looking for a relief rally for Wave 6 between 40.4 and 44, before the drop to 28.
This is what my current information tells me:
1) What I had originally counted as Wave 5 down should never have led to the depth of what would have been Wave 7 down on that original wave count. I do not believe that liquidation events dramatically distort charts. Rather, crash structures foretell the extent of the price drop, and people are liquidated to the extent to which that price would drop anyway. So I'm currently assuming that what I originally counted as Wave 5 down is in fact Wave 3, and that what would have been Wave 7 on that count, is in fact Wave 5. In other words, we're in Wave 6 now, and Wave 7 down, to complete the crash structure, will follow.
2) I cannot be sure of this. It's not a nice projection to consider. But I feel I should aware of the possibility, and that others should also be aware of the possibility. It's difficult to assess what this really means, and what course of action should be taken, particularly relative to altcoins. Is this a massive but albeit limited mid-cycle correction? Or it is a full-blown crash after a significant peak? If a crash, we really should have seen a massive rotation into alts. We did see some, but not enough to be comparable to previous alt seasons relative to BTC tops. If BTC heads down further now, will alts take off into this movement? This is a key question, and I don't have any answers. For those already in alts, is this a time to rotate into BTC, at least temporarily? As we know, -30% for BTC translates to -50% or more for most alts. At least in the short term. Yes, we saw some strong bounces in the past few days (ADA, for example). Will we see the same if BTC crashes further? I have no answers, and it's a difficult situation to face, in terms of temporary capital preservation. Happy to hear the views of others on this quesiton.
3) Based on the rough method of measuring Wave 7 using the 0.786 of the Fibonacci placed on Wave 5, and 1 of the Fibonacci being Wave 7, this suggests that 21.4k could be next, if indeed we are currently in Wave 6, and there is a further downside move to come.
4) In terms of key SMAs and EMAs, a downside move to 21.4 would put BTC in risk of a death cross on the 50 and 200-week EMAs, if there wasn't a very strong bounce at this level. Essentially a V-bottom right out of there. If this cross happened, it would most likely signal conclusively the arrival of a bear market. We can only estimate whether that would happen. It would all depend on subsequent volume. But it does seem at least possible that 21.4 could be hit without a subsequent W EMA 50 and W EMA 200 death cross.
5) Volume is falling. For BTC to fully escape a downward move, it needs to clear 44.1 and then 48.6. But the bottom at 30 would only really be confirmed past 50.6. Volume, so far, doesn't appear to be comforting in terms of projecting any of these near targets.
Compare to one spike in sell volume now.
Note also that in March 2020 BTC essentially went into a sideways range, and revisited the downside, though not below Wave 7's bottom.
Wave 5 to Wave 7 happened within a 16-hr period.
Is this an indication that Wave 7 is already in now?
Or does it indicate that Wave 7 is imminent, and just slightly more drawn out than in March 2020?
Note that if Wave 5 on the 0.702 was repeated now, this would give a downside target of Wave 7 at 17k, which is staggering and somewhat hard to imagine.
The roll up from 5 to 6 was very short, and didn't reach the 0.382. Unlike now, if we're still in Wave 6 now. BTC is currently hugging the 0.5. Is this an indication that Wave 7 is in?
The biggest anomaly is if Wave 7 is in, why did it drop 10k below where it should have come in relative to Wave 5. And why was Wave 5 not obvious and very pronounced on the chart, as it always is?
You would have to see this as Wave 5:
The problem is that it's not pronounced at all, and in fact is shorter than Wave 3.
The roll up to Wave 6, in that instance, would align with expectations in not going above the 0.382.
But nothing makes sense relative to Wave 7.
What could make sense is placing Wave 5 here. But then there's barely any Wave 6 at all - not even reaching the 0.236
I said the March count is problematic. You can see it here.
The crash was not part of an ABC movement, so it's difficult to pinpoint where to start the seven-wave count. Normally, you'd want to start from the last highest high. But in March, BTC was already trending down before the crash structure plays out. However, Wave 3 is pronounced, and Wave 5 is the biggest, so no other count makes sense in this example, if we're looking for those two events. And in March 2020, we know where Wave 7 came in.
Conclusions? I don't really have any. But the absence of two clear spikes of sell volume is concerning.
The fact that Wave 5 in March 2020 also came in on the 0.702 is alarming, in terms of the potential downside base of Wave 7 if that same structure repeats now, and the bottom still isn't in.
Between the 0.702 and 0.786 is where Wave 5 comes in relative to Wave 7. But I don't find until now any real consistency in why it could be either one.
I would like to see BTC V-bottom out of there, and quietly go on to inch up to a new ATH, allowing alts to recover and run, and perhaps see a revival of alt season in a couple of months. But I remain gravely concerned that Wave 7 may not be in. And in a quandary about what this means, in terms of preserving capital at this very moment.
If what we saw was Wave 5 before Wave 7, and Wave 7 can be projected at 1 relative to the 0.702 or 0.786 Fibonacci levels, if Wave 5 hit only the 0.702 Fibonacci, Wave 7 would come in on the yellow line, at 17.4k.
This level is derived from the top of the seven-wave movement down.
Wave 5 of Wave A in the ABC movement came in between the these two Fibonacci levels.
Compare to what we just had, obviously on a much smaller scale:
42000 and 35000. Only my targets are the projection of the Dianmond topping pattern.
Have a look here and nice we have different techniques to come to the same targets!
keep up the great work!
Great trading my friend!