Part 4 : The Elliot Wave road to $3k or $20k+

BITFINEX:BTCUSD   Bitcoin / U.S. Dollar
If you have been following my earlier posts part 1, part 2 and part 3, you will see that I have been watching the bear and bull scenarios since 11k. I have been trading the bear scenario since 11k, although I missed some entries because of the lack of any substantial retraces and I got stopped out on the last short entry at 7.5k yesterday. I have held the view for some time that until BTC breaks and closes above the trendline, I will maintain a bearish view but be mindful of a switch to a bullish scenario.

BTC has now broken and closed above the long term trend line , although there is an alternative trend line that could be valid which has not been broken yet. I am therefore moving from bearish to slightly bullish . Why am I not completely bullish and calling for my moon scenario just yet?

1) Whilst BTC has broken the trendline it is yet to take out any other key resistance levels which in the short term are 8.5k and 9.1k. In particular, breaking and closing above 9.1k would be a significant bullish signal.

2) Whilst BTC does not have to replicate 2014 price action it can be useful to compare against it. If it were following a similar path to 2014, I see three potential scenarios:

Scenario 1: Short term bear then bull to 11k
Refused at trend line , retest 6.5-6.8k to then break through and impulse up to 11k

Scenario 2: Bull to 11k
BTC has broken through the trendline and will continue up impulsively to 11k

Scenario 3: Bear to 3-4k
BTC has not broken through the alternative trend line (going through the second 11k wave) and will move back down to complete the 5th and final impulse of the C wave to 3-4k.

My instincts say we are most likely following something similar to Scenario 3. However, in the short term I will trade a bullish scenario which takes BTC to 11k and potentially on to the moon. Invalidation of this view would be if BTC moves back into and closes below the trendline.

In the immediate short term I added a small position long with a target of 8.4k. If BTC tests the trend line and moves up from it I will look to add to my long position. If it breaks and closes below it, I will close my position. A drop below 7.2k will move me back to my bearish view.

Comment: This is the updated bear scenario
Comment: BTC hit the initial target of 8.4k and I maintained my small long position. I am now expecting to see 8k tested again, which coincides with the 0.236 fib. It may bounce from here to test the 9.1k main resistance. However, it may also continue down to 7.8k (0.382) or 7.5k (0.5 fib). If I see a bounce in any of these areas I will be looking to re-enforce my long. If BTC breaks below 7.5k I think we could see a big sell off as I imagine this will be a key place for stops on a lot of longs. I have also labelled an ABC formation in grey which we might have completed, ready for the next big wave down.

Comment: The next few hours are important, I expect to see a big movement one way or the other. If BTC does not break 8400 on this attempt it will be a double top on both short term (today) and medium term (16 April). On the short term, it will also result in bearish divergence on 1HR RSI. On the other hand, I expect a lot have shorted at the top with stops at just above 8400 and so a break above this level will likely see a strong impulse up.

Comment: The target identified above was hit and quickly rebuffed but the bulls have no need to panic yet. We are finally beginning to get some impulsive behaviour. It's looking good for the bulls, but sentiment can change on a dime. However, given that BTC has broken the long term trend line my inclination is slightly bullish until the market shows me otherwise. I will go fully bullish if BTC breaks and holds the 9.5k.

It looks like we are now in the Minor 3rd wave of the Primary 3rd wave up from the bottom, potentially moving into the Minor 4th retrace before a Minor 5th push up to the resistance at 9.3k-9.5k to complete the Primary 3rd wave. This would coincided with a 2.618 extension of the Primary 1st wave. My target for the Primary 5th is circa 10.6k, which would be a 1.272 extension to end this Primary wave structure.

I have maintained my long entry at 8.1k. I plan to re-enforce this at the next significant pull back. This may not come for a while but what I would be looking for now is a retrace to 8.6k and 8.45k to enter a additional 1/3 and 2/3 of a position respectively. We could of course go straight up from here and in that case I will continue to wait for a pull back before entering a new trade. My stop is now at my entry price.

Comment: I'm looking for an ABC correction here. 1:1 on A:C would need this B leg to go up to about 8850 (0.5 retrace) before it goes down again to around 8400. I'm going to move my buy in to a reversal around that level.
Comment: As @hkh222 pointed out, there is an upward trendline. Adding the resistance line to the top shows they converge on the same target I have to complete primary 3 (9500). It looks like we might not have a further pull back until then, but I'll continue to hold out for a pull back to re-enforce my long.

Comment: Not a textbook one, but an ABCDE is forming. I'm expecting a significant break up or down in the next 12 hours. I'm still waiting for a retrace to around 8450 to add to my long position from 8100.

Comment: Another good bullish signal for BTC. The consolidation triangle broke out on the E wave to the upside. Whilst all the signs are bullish for BTC, I am expecting a pull back at this stage for these reasons:

- I count 5 Minor waves within the Primary 3rd wave and think the 3rd is therefore complete.
- The last Minor 4th retraced bang on 0.382 to 8616, giving me confidence in the count.
- The 5th Minor has now done a 1:1 extension of the 1st Minor wave.
- The Primary 3rd has been exactly a 2.618 extension of the Primary 1st.
- To round things off, BTC has reached the top of the channel.

This could go on further but I just think the weight of probability favours a pull back and I'm content to miss the boat if it doesn't happen. I'm going to maintain my current long so I've got skin in the game.

The first level of pullback is likely to be the 0.786 (8777) of this last Minor 5th. BTC may also post a double low at 0.236 of the 3rd wave (8640). I'll look to buy in both of these areas. The area I will be looking for a large position, if BTC gets there, is the 0.382 retrace which will also hit the bottom of the channel and the top of the alternative log trendline at around 8250.

Comment: RSI Divergence on the 30 mins which I expect to filter through to the 1HR to trigger the pull back.

Comment: BTC continues to look impulsive. It may have completed an extended 3rd wave, pushing out of the channel and past the 2.618 extension of wave 1. It has since put in a 0.5 retrace to 9,200 on this last wave up from 8,600 so it could go on up from here and continue its extension or may retrace more to do a small dounle bottom at 9,200. In that case I will not look to increase my holdings.

To increase my long position, what I am looking for now is a ABC with an extended 1.618 C on A to reach out to 8,600 - 8,500. This would overlap with a 0.328 retrace of this 3rd Primary Wave and the 0.382 retrace of the wave from 11,700 to the recent 6,500 low. Ideally this will take a week or so to retrace so that BTC touches the bottom of the channel, but I think this is unlikely. It may also produce a 1:1 A:C, with resistance turned support at 9,000.

I'll therefore look to enter 30% of a position at 9,000 and the remainder 70% at 8,600. The stop will depend on how soon we reach out to those areas. Target would be 11,000 as this stage.

Comment: holding for 1.168

Comment: It looks like BTC completed Minor wave 5 up to 10k with an ending diagonal to end Primary wave 1 up from 7k. I had expected it to test the 11k again. The Bulls expectations would be that it will now consolidate in an ABC Primary Wave 2 before pushing on for the big impulsive Primary Wave 3.

Minor wave A may have completed, entering wave B now. If this gets to around 9.6k (0.618 retrace) a 1:1 A:C would see BTC falling to 8.5k before starting its next Primary Wave 3. This would conincide with the 0.382 retrace of the Primary Wave 1 and support found form Minor Wave 4 with that Primary Wave 1.

Comment: ... with correct arrows ....

Comment: The retrace failed to deliver a 1:1 A:C retrace so I expect an 1:1.618 to complete the three minor waves of the C wave. I'll be looking to add to my position at around 7800 if it gets there.


Best break down of both possible scenarios I've seen here in Tradingview. Great work. ...and thanks for sharing.
+3 Reply
Hey @Monkia, dont you think this was too fast as correction?
@monkia ,
As I wrote in my idea update, the operators should take the price a bit higher, at least to 9.8K before allowing a pullback. 9.8K will totally neutralize the med term bearish sentiment. Then a pullback will be supported by the currently broken resistance around 9.2k, to re-confirm that the bear market is over for now. I draw a pitchfork which seem to be working really good. The green channel could provide support as well.

monkia cI8DH
@hkh222, yes, nice idea. I can see the 9.8k resistance and the possibility of support back on 9.2k. If 9.5k breaks I expect there will be lots of short stops kick in to quickly take us to the 9.8k and reach oversold conditions which would trigger a pull back. I'll probably even looks to sell at 9.8k if we get there! I've seen at least 3 people I follow with that as their stop level. I'm just not sure we will get that far though, but happy to sit on my long to see....
cI8DH monkia
@monkia, I am not sure either but buy operator plan theory says they should. Here is the same chart in linear working even better.

monkia cI8DH
@hkh222, nice call so far
cI8DH monkia
@monkia, 9.8k was correct. 9,2k was correct for the first bounce but couldn't hold in the next drop. let's see how it goes.
The uptrend line,also the lower line of the ascending wedge, is being tested right now. I think we will go down and probably in the next 2-3 hours tops
As @hkh222 pointed out, there is an upward trendline. Adding the resistance line to the top shows they converge on the same target I have to complete primary 3 (9500). It looks like we wont have a further pull back until then but I'll continue to hold out for a pull back to re-enforce my long.

Thank you very much! I feel like your approach to TA is one of the most real ones and acts as a great example to me ;)
Keep up the good work, it's very much appreciated!