I know there is a lot going on in this chart... but it can be broken down into these simple components. PLEASE READ SUMMARY SECTION:
Bullish (Green Box):
1. Pattern break: For the past month, it looks like we have been accumulating in a pattern similar to a symmetric triangle. With the recent pump, we broke out of this triangle to the topside and the dump resulted in a near-perfect retest on the higher timeframes. Since it did not break back into or below the formation this can be considered a successful retest and not necessarily a fakeout. This incites bullish bias and yields a predicted move to about 11k.
2. This 11k target aligns nicely with the 100% fully realized target of the fib extensions based on a corrective wave I to II in the outlined Elliot cycle.
3. Bullish fib retracement: from 0 to I (Elliot wave) - every time the golden 0.5 - 0.618 region is tested bulls successfully defend price action.
4. Stochastics falling back into a bullish control zone and flashing a hidden bullish divergence.
5. (Not pictured) - Bears just manged to tap 25x long liquidation levels, bulls expected to return the favor with a 25x short tap around 10k.
Bearish (Red Boxes):
1. Bearish fib retracement: placed based on the corrective wave I to II - bears have also managed to defend their own respective 0.5 - 0.618 region (with only 2 tests).
2. Profit-taking + volume resistance: The 2nd red box outlines a region of heavy volume resistance and coincides with the 50-61.8% region from a fib extension drawn between 0-I-II on the presented Elliot cycle, which is usually a profit-taking area for many algos and traders (is a bullish target - hence creates selling pressure).
3. Price action has been crawling along the 21 EMA - closing above it indicates bullish control but continuously testing it only makes it weaker.
Summary:
Overall analysis indicates a bullish bias. However, currently, we are either experiencing a 3 wave corrective structure. The final C wave can either have already been completed (if wicks are counted - identified by the blue arrow in the diagram) or could experience one more drive to the downside to tap the 50-61.8% shorting target area (based on fib extension on the recent dump). Breaking past 9k would be dangerous for the bulls. However, this does present a good buying zone if you are bullish. Although price action could also continue climbing from current levels as oscillators are returning to bullish biased levels.
It is important to also consider a bearish scenario. Firstly, the bullish control zone has been tested many more times than the bearish control zones and hence could be losing bullish momentum. I think it is possible that price action pumps through the first red box (0.5-0.618 bearish control zone) but then gets rejected by the 2nd red box. Psychologically 10k is a very important number and can result in a decent amount of FOMO to then be trapped in the 10.2-10.4k region. FOMO coupled with strong volume resistance and longs taking profit can result in either a small pullback with consolidation into another bullish drive or a strong breakdown of the price. A breakdown would confirm the completion of the 5th wave of a greater Elliot cycle (outlined in my other idea - please check it out) and could result in a turnaround of overall sentiment and begin a greater corrective formation (3 waves to the downside)
Bullish (Green Box):
1. Pattern break: For the past month, it looks like we have been accumulating in a pattern similar to a symmetric triangle. With the recent pump, we broke out of this triangle to the topside and the dump resulted in a near-perfect retest on the higher timeframes. Since it did not break back into or below the formation this can be considered a successful retest and not necessarily a fakeout. This incites bullish bias and yields a predicted move to about 11k.
2. This 11k target aligns nicely with the 100% fully realized target of the fib extensions based on a corrective wave I to II in the outlined Elliot cycle.
3. Bullish fib retracement: from 0 to I (Elliot wave) - every time the golden 0.5 - 0.618 region is tested bulls successfully defend price action.
4. Stochastics falling back into a bullish control zone and flashing a hidden bullish divergence.
5. (Not pictured) - Bears just manged to tap 25x long liquidation levels, bulls expected to return the favor with a 25x short tap around 10k.
Bearish (Red Boxes):
1. Bearish fib retracement: placed based on the corrective wave I to II - bears have also managed to defend their own respective 0.5 - 0.618 region (with only 2 tests).
2. Profit-taking + volume resistance: The 2nd red box outlines a region of heavy volume resistance and coincides with the 50-61.8% region from a fib extension drawn between 0-I-II on the presented Elliot cycle, which is usually a profit-taking area for many algos and traders (is a bullish target - hence creates selling pressure).
3. Price action has been crawling along the 21 EMA - closing above it indicates bullish control but continuously testing it only makes it weaker.
Summary:
Overall analysis indicates a bullish bias. However, currently, we are either experiencing a 3 wave corrective structure. The final C wave can either have already been completed (if wicks are counted - identified by the blue arrow in the diagram) or could experience one more drive to the downside to tap the 50-61.8% shorting target area (based on fib extension on the recent dump). Breaking past 9k would be dangerous for the bulls. However, this does present a good buying zone if you are bullish. Although price action could also continue climbing from current levels as oscillators are returning to bullish biased levels.
It is important to also consider a bearish scenario. Firstly, the bullish control zone has been tested many more times than the bearish control zones and hence could be losing bullish momentum. I think it is possible that price action pumps through the first red box (0.5-0.618 bearish control zone) but then gets rejected by the 2nd red box. Psychologically 10k is a very important number and can result in a decent amount of FOMO to then be trapped in the 10.2-10.4k region. FOMO coupled with strong volume resistance and longs taking profit can result in either a small pullback with consolidation into another bullish drive or a strong breakdown of the price. A breakdown would confirm the completion of the 5th wave of a greater Elliot cycle (outlined in my other idea - please check it out) and could result in a turnaround of overall sentiment and begin a greater corrective formation (3 waves to the downside)