Overall sentiment is still bearish across markets.
Price rejected at the 200W MA. This pivot forms our A-C line. A-C line confirms our bear flag/ channel/ wedge as it is parallel to the 0-B line. B-D line will give confirmation.
Volume backing off. Volume mimics the previous flag/ sideways correction
All things being equal/ proportional, flag target projection lands price in the 9-12k zone.
Some may be inclined to think we're already at the bottom because of the EW count below: I would say the Intermediate Wave B is a WXYXZ correction. The Z leg has an unnaturally short extension, however, this is the last pivot before the channel is broken so I think it is valid. Why this is important is because it changes where Intermediate Wave C begins, in turn changing where Minor Wave 1 of Wave C begins. This is important if that changes where wave 2 is drawn (refer again to the second chart).
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It is important to remember EW is highly subjective. I welcome any critique in the comments below.
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Closeup of bear flag
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Price is currently touching the lower line of our bear flag at point D. Here's another angle of PA with fib levels. As you can see price has made major pivots at different levels. If 0.382 holds, this will confirm the 0-B line and further validate our ABCDE projection. If price moves accordingly, look for a short around 20.9k (adjust for how strong/weak BTC looks in the coming days). Be careful of Stop Loss hunting near the downward (red) trendline. Safe TP target would be the 300W MA, or 17.5k.
--- Disclaimer: This is not trading advice.
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I find this interesting. Don't know if it signifies much, but the bar distance between points A-B and C-D are exact at 104 hours each. 0-A and B-C are very nearly exact as well.
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BTC broke through the bottom line of the bear flag. ETH has broken far past and a day earlier. While NASDAQ is still within the triangle, having broken out of the major downward trendline (white dashed line). Though it should be noted S&P has yet to break through theirs. As well, BTC and ETH are still well within their downward channel.
BTC having already broken below its bear flag (compared with NASDAQ's triangle) may be a result of weekend trading. Price action for both corrections occurred within days of each other, as with many other markets. Weekend trading may have accelerated the trend for BTC. It is possible that BTC is leading this trend, and we can expect other markets to remain weak. However, it is possible BTC overshot and will resume within the bear flag if NASDAQ finds support on this major trendline. As S&P still remains in its downward channel, the fact that NASDAQ has broken out, which is 'technically bullish', doesn't have much weight. However, BTC breaking below its bear flag is further bearish. It confirms weakness in an already bearish trend. Volume remains to decrease for BTC throughout this sideways correction, which is another indication of weakness. In terms of adjusting the entry for our short position at 20.9k based on BTC looking strong/weak in the coming day, this is a clear sign of weakness.
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Wave count is still in play. Short position with SL expecting downward trendline to be broken.
Disclaimer: Bullish sentiment is on the rise. Risk of trade succeeding below 50%. RR 3.67
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The downward channel was broken as expected.
Just wanted to point to these cycles again. Pivots within the flag have been equidistant so far, and PA seems to be responding to the latest one. PA tested the downward trendline and found Bullish support. PA tested the upper line of the flag and found Bearish resistance. Markets appear to still be indecisive.
4hr US OIL: Price trending at the upper line of the downward channel. Note BTCUSD trending at the upper line of the bear flag. 1M US OIL: Mean Reversion Channel status: Overbought (weak) Distance from mean: 43.43%
A truncated Z, of a WXYXZ ? I don't think so. Should have stopped at WXY. If you stopped at WXY, that would be a Sharp Double Zigzag, which is allowed to have a zigzag in both the W and Y. By adding the Z, you turned the correction into a horizontal WXYXZ, and it was immediately invalid: 1) A horizontal WXYXZ is allowed a zigzag in only ONE of the actionary waves (W Y Z) A little known rule, and one that will help you from going astray. 2) That Z is actually an A (diagonal), B, C (impulse). Your Z is not impulsive. Check 1 hr time frame.
MiserableToppings
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@gz1968, Hi, thanks for your feedback! Does this work for you? Zigzag X Flat X Triangle ?
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@gz1968, Your first point makes sense and aligns with what I've seen for WXYXZ combos, i.e., your point (1). But your tone / language is perhaps a bit pejorative / disdainful -- maybe unintended, but I don't understand this part of trading culture that appears so often, where so many traders think that they should talk down to everyone else when they see something that might be incorrect. Everyone, even the highest level pros, make mistakes all the time. Sorry if I'm misunderstanding your intent.
Regarding your second point, I'm not sure an ABC corrective pattern can follow a WXY as you suggest for the "truncated Z." I've never seen that mentioned or identified in any authoritative resource. Can you point me to an authoritative EW source that allows an ABC following a double 3 WXY or double zigzag?
SquishTrade
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Great analysis. :) Thanks for sharing it!
I wonder if the 5-wave C pattern (larger degree w-C) will have an extended sub-wave 3. In this scenario, assume everything else remains constant with your wave counts except for sub-wave 3's end point within larger w-C. Maybe this works too: Sub-wave 3 has just begun so that your label for sub-wave 3 is actually just the first sub-wave (i) of sub-wave 3 (sorry for all the "sub-sub-waves" -- TV doesn't have the usual naming conventions for ease of reference). Does that make sense as a possibility? Then, if sub-wave 4 would really just be sub-wave (ii) of sub-wave 3 of w-C. So then wave 3 has a lot farther to go to complete, and this might line up with the "equality of corrective moves" at the larger degree of trend, where w-A = w-C. Just an idea about how the waves might work, have no idea if it's correct.
MiserableToppings
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@Burning-Theta, Dw, you made that easy to follow! I see what you mean. Turning the scale to log would help visualise the third wave extension. If this were the case however, would that not place wave 5 of larger wave C very far down, towards 3k? There are some bears out there that have been calling for 3k since April.