There are two possibilities here. The first is that the corrective wave has completed and that we are in the early stages of a bull trend. The second is that the corrective wave is even deeper than originally thought, and we are just nearing the end of corrective subwave B of the correction. However, market analysis doesn’t only consist of , we also need to consider , and market sentiment. The three pillars of market analysis.
Fundamentals are weak, given the political environment in China, and the announcement by the Chinese government that all crypto exchanges will need to be closed by end of Sept. with a grace period being given to a couple exchanges to the end of Oct. What this means is that there will likely be a large migration of to other asian markets, likely Korea, Japan, and others. In addition, it is also highly likely, that many Chinese will just sell and withdraw their Chinese Yuan, and so this news is highly for Bitcoin and all crypto in general, as Bitcoin sets the overall market trend.
Market sentiment is still quite . There is a market-wide feeling of fear, uncertainty, and doubt. There is a feeling of distrust of the recent bull move, seeing it as a kind of bull trap before even deeper lows are realized. It seems many are quite content to sit on the sidelines, waiting it out until things stabilize and there aren’t so many contradictory signals.
Given this, I am of the view that we are very mush still entrenched in a bear market and the second scenario that we are moving to deeper lows is much more likely.
In this context, it appears that we are nearing the end of the B wave of a larger correction. This B wave has a notorious reputation for being a bull trap, as it can appear quite aggressive. We may still have some room to continue the B wave to the $4100 or $4200 range, but when it finishes, we should begin the C wave of the correction. And this wave has the potential to bring us down to somewhere between the $1800 and $2500 area.
So the correction looks very roughly like this:
A wave: $5k-$3k
B wave: $3k-$4k
C wave: $4k-$2k
Preliminary price targets for wave (II) correspond to wave (I) fib. retracements of 0.5 and 0.618 giving $2475 and $1835. In addition, we have the 1.0 extension of wave A at $2081.
On top of that, the long-term (1d) intersects this price territory at around the $2500-$2600 level. And the last time we had a major correction (40%), we closed about $100 below this for a few periods (over half a day) before reversing.
Also, establishing a parallel descending trend channel for the current correction, shows that we can reach our targets without ever leaving this channel.
Lastly, experimenting with the Fibonacci sprial tool shows how these price targets can touch the spiral with target lows reached sometime in very early October. The chart is scaled so that this fib. spiral aligns with the fib. time-based extension tool, for calculating wave C as the time-based fib. 1.0 extension of wave A (or at least it was, but publishing seems to have re-scaled it slightly and moved the spiral just short of the fib. 1.0 vertical).
Target I: Wave (II) = intersection of long-term (1d) trend-line ($2575)
Target II: Wave (II) = 0.5 x Wave (I) ($2475)
Target III: Wave C = 1.0 x Wave A ($2093)
Target IV: Wave (II) = 0.618 x Wave (I) ($1835)