DanV
Short

BTCUSD - POSSIBLE CYCLE COMPLETION WITH LIMITED UPSIDE

BITSTAMP:BTCUSD   Bitcoin / Dollar
In my last chart (link below) a retracement bounce with target of 380 zone did not play out as anticipated even though we have now bumping into 340 zone.

During this period with both up and down swings, many chartists using differing methods are suggesting that we have formed a major low and are now in new "Bullish Cycle". Several have asked if there is any case I could make to justify this.

"DOW Theory" looks for series of LH & LL, OR HH & HL to denote up &down trends. One important thing to remember is, what cycle degree are we referring to and within the same cycle degree powerful rallies or declines could take place without altering the overall trend.

Note in the chart below on Daily time frame: we have series of LL & LH since Nov 2013 high. This means that based on DOW theory, at this degree, we are still in bearish cycle and change would not be confirmed till we get a new high above June 2014 high (700 zone) with subsequent HL being formed on any retrace.

However, since Jan 2015 low we are in intermediate bullish cycle according to DOW theory in that we have a High (25th Jan 2015) & Higher Low (Aug 2015) and now forming a Higher High. Does that in it self suggest that we will continue to see series of new HH & HL? Also consider that since 31st Jan 2015 low, we don't actually have series of HH & HL. Rather we have HH & LL so far. Does this suggest Bullish cycle behaviour according to Dow theory? I am not sure if it could be argued to say yes.

Based on EW theory, it seems that we have larger WYX zigzag from Nov 2013 high to Jan 2015 low, which could be labelled as possible Wave A completion. If correct then retracement bounce since, is likely a wave B (which technically can retrace much higher) suggesting that once complete, we would expect to see a strong 5 wave move to the downside for Wave C, OR continue to chop about in some complex corrective pattern in this range. Since that major low every up & down swings appears to be of 3 minor swings. It lacks any signs of showing clear 5 wave move up as essential for any new bullish cycle to develop.

In Summary, we have 2 possible scenarios both suggesting limited upside and at least a retest of the Jan 2015 lows or new lower low to follow as detailed below:

Scenario 1: ABC zigzag with Wave C in the form of Megaphone or expanding ending diagonal (see schematic diagram on the chart). If correct then we might be close to making reversal in the 340 -350 zone.

Scenario 2: Expanded Flat in the form of 3-3-5 construction (see schematic diagram on the chart) which could be still be ABC zizgag of the Jan 2015 low. If correct then we have wxy to Wave (a), Wave (b) also of 3 swings and now in progress to complete Wave C with 5 waves in the form of possible expanding diagonal of 3-3-3-3-3 construction. In this event we could be near completing wave 3, a retrace for wave 4 and wave 5 to follow to the upside to complete this cycle.

Upon completion, we could develop more complex sideways correction OR have strong 5 wave decline to retest Jan low or make new lower low around 100 zone as being in proximity of wave 4 of one cycle degree lower as suggested by EW guidelines.

Warning: This is my interpretation of price action using TA approach that I consider helps me most but could be completely wrong. Therefore as always, do your own analysis for your trade requirement and ignore my views.

For those who appreciates my analysis, select to follow me and the chart for notification of future updates. Indicate you like my analysis by thumbs up, comments and sharing it with others. If you have an alternative idea then please be constructive and share for all to learn from.

Thank you for taking the time to read my analysis.

DanV
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Hi Dan,

What do you think about such scenario?

Most pessimistic scenario right now
Reply
DanV MOD ryopphdi
Hi, Thanks for your question and sharing your chart.

Indeed that remains one of the strong possibility in terms of your labels A,B and C though not sure if the i-v applies in wave A in addition to 1-5 as your wave 3 looks more like 3 swings and not 5 as you suggest in your chart above, nevertheless same out come.

The only other possibility which could avert the price drop below 250 approx is if we have much larger triangle being formed including all price action since Nov 2013 high as wave 4 of larger degree. For this to remain possibility the uptrend line from Jan 2015 low needs to be held. Too early to tell at present.
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Thanks for commenting.

I agree about 1-5 waves looking as 3 swings. The reason it was marked as such is downward move from Nov 2013 does seem to correct whole bull market 2012 - 2013. If we look at time element it is more likely such a long bear market is response to whole bull market, not just part of it.
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DanV MOD ryopphdi
I understand. However, there is not real rule that restrict the correction due to time elapsed even though it might makes perfect sense. The picture should get clearer with more data.
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I find that Elliot Wave is not the best tool for market prediction. It can help set a clearer picture, yes, but most of the time as you say Dan: the picture should get clearer with more data.
The uptrend to 400 it still intact
Reply
Thanks for your comment.

EW may not be the best tool, but then I am not aware of any disciple or approach of TA can give you consistently exact lows and highs well in advance.

My view is that any TA is an attempt to frame the price action to enable trader to predict or anticipate likely future move. In that context EW which do incorporate other forms of tools such as trendlines/ trend channel/ Fibonacci, momentum etc. So I feel it does have some advantages that other forms of TA do not.

With all things, more data always clarify details but often the trade off for that is that some of the move could be over, unless in major directional trend that will last a long time.

Appreciate your thoughts anyway. Thanks.
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IvoZ DanV
Hello DanV, has continuous uptrent in the recent days and overshoot fo your targets changed everything in your opinion in the main chart? Do you still expect large drops incoming?
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Thank you for your question. Not entirely sure what you are seeking from me nor if you are simply wishing to see if I will ever change my view.

First of all let be absolutely clear. I have not inherent to agenda nor wish necessarily wish to see the price of Bitcoin's decline or will it just because I might say so. Since I get the feeling from several questions and my interaction with others that leaqds me to suspect that many feel that no matter what, I will always suggest that the price will decline.

So in my answer to the above, forgetting that this is a Bitcoin (and all the competing sentiments I observe amongst the Bitcoin community) and taking this as purely a financial instrument (which in the minds of many clearly it is not and I have no issue with that), and looking at the price action since Nov 2013 high, it seems that we have a zigzag decline resulting in Jan 2015 low. Ordinarily by this corection, I could conclude that overall correction is complete. If this was the case however, you would at least look for 5 wave impulsive move of the Jan 2015 low based on EW principle. Many analysts and traders feel that the strong rally we have experienced is the evident 5 wave move I should be looking for.

However I cannot see that being the case, nor has anyone yet satisfactorily shown me the valid wave counts. So if we do not have the 5 wave impulsive move of the Jan 2015 low, then in my view it seems that whatever it is, it's a part of corrective move of the decline from Nov 2013 - Jan 2015. Now this could either be a zigzag or some sort of triangle or other combination of moves to the upside, even if this results in a price moving much higher ie, 700+ but on completion would likely result in eventually dropping back towards Jan 2015 low.
Reply
Alternatively, and it is very speculative view, that we might see a massive contracting triangle which includes the price decline from Nov 2013 high in the form of 3-3-3-3-3 configuration. In this event whilst we will continue to move in up & down cycle with each contracting but consisting of 3 swings. In this event it has a long way to go before it is completed but at least the lowest swing of pattern formed in Jan 2015 will be the lasting low.

Now if you are realistic, I don't think anyone in their right minds could say with 100% certainty which of the eventualities will be true. I am not aware of any method which can say that the final low is in. Only time will tell.

So in that context, I am open to both possibilities that final low is in place or that we are retracing the decline from Nov 2013 high to Jan 2015 with final low is yet to form.

This might not be the answer you are looking for nor will it assist you or anyone who might feel that they wish to know where is the absolute low. However, no matter how may times I am asked, I cannot add any more than above and which in various forms, I have already expressed before.

The chart below, is only intended to give you some ideas of possible outcome based on EW principles as likely patterns in this overall juncture. In deed there may be some other permutation or combination of them, I cannot reasonably envisage nor be able to show as the chart will become just jungle of lines. But hope it will illustrate both the likely complexity and the possibilities that the final low is yet in the future.
snapshot
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snapshot


Hi, DanV.

I am trying to do some wave count in weekly chart and found there're two possible situations. One is WXY with minor wave 5 forming double bottoms indicates bearish trend ended and new bullish trend started. Another is from Jan 2015's low forming an ABC flat retracement (3-3-5) where C wave is an expanding diagonal which also is megaphone pattern. These wave counts seem to make sense but hinting different directions. If you don't mind, may I ask how you determine which wave count situation would be the case in your knowledge base and experience.

Also, I compare T-bond (US1!) with BTCUSD a they are inverse related. If that is the case, considering 30 years T-bond price is probably topping, then BTCUSD may have a ride. Here's the chart
snapshot
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