BTCUSD - $8.2k for a bottom

BITFINEX:BTCUSD   Bitcoin / U.S. Dollar
After exiting on the break of the Leading Diagonal , I am long dollars in my trading pot but still have about 35% tied up in coins in my core pot. I have been reviewing when to buy back in and whether to sell down any of my core pot. Before we get to that, let's review where we are.

Past price action
A Leading Diagonal Wave 5 was completed up from Wave 4 (9,3k). This was a truncated 5th with the height of Wave 3 not being reached. The wave ended in a Irregular Flat initial correction sequence and then pushed down for a 5 Wave impulse. The impulse ended with an extended Wave 5, triggered by some external news. A retrace on the corrective wave is slow but is underway.

Moving forward
Following EW Theory, corrective sequences can not just be 5 impulse waves. They must be part of a 3-3-5 or 5-3-5 combination. If you accept the wave count shown, there is more to come. As a minimum, a 3 wave retrace followed by 5 wave impulse down is required. This could then enter a new impulse wave up or do an X up and enter a combination pattern going further down.

Typical patterns for 5-3-5 are:
B : 0.382 - 0.5 retraction on A
C : 0.786 - 1.618 the length of A, with 1:1 being the most frequent.

Scenario 2 (shown below) is an alternative count which would allow for this wave 5 to be completed. That would have had the 5 waves up completing on 20 Feb. It has then posted 3-3-5 which would likely have now bottomed out. As above, this could then enter a new impulse wave up or do an X up and enter a combination pattern going further down.

My plan
Both options are valid and possible but my conviction says we completed 5 waves on 5 March, not 20 Feb and must do a 3-3-5 or 5-3-5. I'm comfortable we have done 5 waves and can rule out 3-3-5. Therefore I believe a retrace is required, along with another 5 impulse waves down.

I would like to sell my core holdings at the top of the retrace but I can not rule out scenario 2, which will continue on higher. It will be impossible to tell which one is playing out until relatively late in the scenario. I will try and sell out if I see clear signals that a new impulse down has activated.

My conviction is that we will come up from the C Wave and I will look to buy back in at the bottom. I expect a 0.382 retrace for B and will count the waves down but will likely target a 1:1 on the length of A. These targets can be adjusted once wave B has completed.

Targets using current data:
B : 10,200
C : 8,200

Scenario 2:
Comment: This is interesting.... you can count not only the 3 impulse waves but the 3 sub waves in each of them in that monster drop today. It looks like a straight line on large time frames, but 1 MIN time frame tells everything. Unfortunately I wasnt at a computer to buy at the time!

Comment: If the main scenario plays out, this is textbook so far. We are in the C wave of the correction with an impulse wave up. Of this wave, 1 has completed and 3 is not far off. Price action suggests this wave will end around 10,300.

We then have a few scenarios, but two are most likely:
1) ABC complete and down for 5 more large impulses
2) The ABC I have labelled is actually wave 1 and 2 of a new 5 wave impulse.

My guess is that it is not (2) because that A leg does not look like a 3 wave impulse.

A fringe scenario is the AB we have already done was a partial correction and we have just started the wave 1-5 of ABC correction.

My plan
I will likely short the top of this wave. I will manually manage the stop, if it looks like we are going into a new wave (rather than just extending the current), I will stop the order. Once I see the retrace is on, I will move the stop to just above my entry in case of a double top.

Initial target is for a double bottom but I will almost certainly let this play out.

Note the top of this wave is NOT where I have indicated. It is when the 5 waves are complete, which may be difficult to judge.

Comment: We had the B wave retrace but it was lack lustre, not even getting to 0.318. I sold out all coins when we broke the double bottom but did not short.

My conviction is we have completed the A leg, with a 5 wave structure. We then had a small retrace for B and are now in the first of 5 waves down to $8k to make a 5-3-5.

We just completed a three sub-wave impulse down and so need to do a retrace. The retrace so far has not got to 0.382. It could well retrace to 0.618 (9.6k) but I would want to see a break above 10k or clear impulse wave structure before I go in.

I do not think so, but we *may* now have completed the 5th wave of a bigger ABC (scenario 2) and heading back up.

Given the low retrace on the B wave, the targets for the end of this 5-3-5 are now 8k, assuming a 1:1 between this C wave and the A wave. However it can land anywhere between 0.786 and 1.618. I expect we will see a dump and bounce on $8k. However, that does not mean it is plain sailing from there. We could go into an X for another ABC down.

Comment: I think we have one more push down to complete this retrace. BUT that does not mean it is a buy zone and we are out of the woods. I'll try and update with more detail later.


@monkia I was wondering if Wave 5 can be lower then Wave 3? Also, can Wave C be higher than Wave A? I'm new to EW theory, so I'd appreciate your imput. Thanks!
Acel ion.tsurcan
@ion.tsurcan, Yes wave 5 can be lower than wave 3 aka truncated . Wave C:A ratios are 0.618 1 1.236 1.618.
The problem is that from experience in cryptos I guess the panic-sell caused by Binance hack will completely destroy most of wave predictons... It is still respecting fibo though
monkia CryptoGoldenBull
@CryptoGoldenBull, Maybe, my view is that it did not. I think we were already heading for that level on wave 5, we just did it a lot quicker. As you can see above, it even had the five internal waves. The wave 5 ended at exactly the 1:1 of the wave 1. Much faster, but everything else (EW, fibs, etc) normal.
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