OMGUSD - big third wave of super cycle third wave?

BITFINEX:OMGUSD   OmiseGo / Dollar
If you have been following my earlier posts (OMGUSD on the back of OMGBTC . Key decision time coming soon....
and 500% return and 5 other reasons you should buy OMG ) you'll know I am a big fan of OMG because both the technical and fundamentals stack up.

Of the 15 or so blue chip coins (top 50) that I track it is the best performing in Feb, even being up slightly on LTC.

I buy coins when I see their TA stacks up against BTC and USD. This is absolutely the case with OMG at the moment. If my analysis is correct, we are entering a big 3rd wave impulse of a big super cycle 3rd wave. These waves often deliver growth of 2.618, 3.618 and 4.618. This post goes into more detail of the way its performance against BTC .

My plans
I have been in OMG a while and have been buying on the dips over the past few weeks, mainly moving from BCH, XRP and IOTA into it. Now there is more data to support my conviction that we are going into this third wave, I will look to double down on my position. The set up I am looking for is a pull back from a completed wave 1. This may be occurring now or wave 1 might continue to go up more before doing so. I will be aiming for at least a 0.5 Fib retrace from this first wave up from around 15.5. I have shown a potentially entry point, BUT that will change depending upon when this wave 1 starts its retrace. My targets are high, as I am expecting an extended wave 3. I'm looking for an extension of 2.618 vs either the recent wave 1 (from $7.1) @ $40 or the super cycle wave 1 ($1) @ $32. Stop loss would be below the start of this latest retrace at 15.4 or lower. The risk reward will be clearer once we can see when wave 1 has finishes but at the moment it would give a good 7:1.

Comment: Entry : 50% retrace of wave 1. This is likely to change but if the retrace happened now, it would be 17.8
Stop loss : 15.5
Target 32/40
R: 7:1
Comment: I want to see a reversal at the levels above before entering. Just be careful of entering this if BTC goes into free fall. I will want to understand BTCUSD structure and levels before entering another OMG trade.
Comment: OMG posted the perfect formation for entry and I should stick to my plan. The problem I have is that BTC is in a crucial point and I'm pretty certain that if it goes, it will take OMG with it. I have a post following BTC showing when I will enter on it. I will look to do OMG at the same time.

Trade active: I have placed an order on OMGBTC. I have NOT place an order on OMGUSD at this point. I will wait until BTCUSD outlook is clearer for that.

Entry: 0.0017874
Stop: 0.00172077
Target: Top of the Minor Wave 3 and Micro Wave 5 (currently 0.00215)

The stop has support from:
- Up trendline
- 4HR 50EMA
- Primary Wave i top
- Minor Wave (1) top

** Wave annotation, largest first
Super : Large black e.g. 1
Primary : Bold grey e.g. iv
Minor : Circles e.g. (4)
Micro : Small light grey e.g.4
Comment: Trade closed automatically by the stop. Update to follow shortly...
Comment: Health warning : This gets very technical.

It's taken a while to update this because the formation that unfolded had a significant impact on the wave count I had done. In particular the Diagonal formation between 18 Feb and 26 Feb has a significant impact on the wave counts that are allowed under Elliot Wave theory. If you use EW you can't just pick and choose what rules you use and ignore some of them when the formation doesn't fit.

As Sherlock Holmes said, eliminated the impossible, whatever remains, however improbable, must be the truth. If you believe in Elliot Waves then you must be like a detective and probe until you can apply a count that is correct.

Over the past few weeks a Diagonal formation has occurred on a Minor scale with a sharp break up and then down which has meant that only a limited set of wave counts can be possible on the Super scale.

The Diagonal formation had to either be a Leading Diagonal or an Ending Diagonal. A Leading Diagonal can only occur in wave 1, whilst Ending Diagonal can only occur in wave 5 or a corrective C.

An Ending Diagonal that is going up, has to be followed by a correction down. Given that we had a large spike up out of that Diagonal, it has to be a Leading Diagonal. This then creates massive ripple effects for the remaining wave count.

On a minor scale this formation meant we had a very compact 3rd Minor Wave, followed by a failed top (truncated) 5th.

The Leading Diagonal has to be in Wave 1, so this means it has to sit inside a larger wave structure, putting it at the start of Primary iii. This then allows for the correction down that we have seen to iv but it also means we have to come back up for the final wave v.

This also means that iv overlaps with the Primary i, which then again means the Super Wave we are in has to either be a Leading Diagonal or Ending Diagonal. This is where the wave count takes on two very different possibilities.

Bear case - Ending Diagonal (Shown in Orange)
We could be in an elongated correction which started from the main wave I on 13 September. Having posted an A wave and now just completing a the smaller c within the B - the Ending Diagonal. This would then take us down to the C and bottom of Wave II.

Bull case - Leading Diagonal (shown in grey)
We bottomed out the corrective wave II on 8 December and completed the 1st Wave up from this on 9 January with a corrective Wave 2 on 6 Feb. We are now in the Leading Diagonal of wave 1 of the next impule wave up to complete wave 3.

On a large scale it doesn't help me much. For example, the Bull case would be invalidated by a break through the bottom of (b) 0.00118. However The C wave could terminate there, falling short of A and then a new impulse wave start up from there. The c wave we are in could also continue up for some time. This only really helps me be more open minded to the possibility of being in a corrective wave structure.

Short term my conviction is we are in an impulse wave up. I think we need to go up from this iv to complete the wave v. We will then have a pull back for the corrective wave II. So whilst I am bullish for OMG vs BTC in the immediate short term (1-7 days), I do expect a greater correction to materialise over the coming weeks. I intend to hold my current trading coins in OMG but will look to sell off some of these for this coming corrective wave II at the top of this wave v (around 0.002).
Comment: My thanks to @Acel for acting as a sounding board on some of the above.


Interestingly , I am seeing a similar standoff in BTC/USD where we are either completing the II subwave retrace and entering the third (III) subwave impulse or coming down to complete C wave correction, to complete the head and shoulder. Stuck in the balance. Still seems better to trade BTC in this correction market since these larger alt coins track it so closely.

The smaller market cap coins however pose greater BTC divergence. With higher risk of course.
Hello, thanks for sharing.
OMG has remained so far despite the fall of BTC. Do you keep the targets?
monkia gusccbb
@gusccbb, yes I keep my upward targets and the trade set up was perfect but BTC performance gave me pause. I'll look to enter further when BTC entry trade is confirmed.
gusccbb monkia
@monkia, thanks for answering. Last night I set an alarm below $ 17.99 and it did not run so I did not establish entry. Do you estimate that a $ 17 setback is still in effect?
monkia gusccbb
@gusccbb, looking at OMGUSD in isolation I would say that the retrace is complete and I would load up. However, I am sure it will be influenced by BTCUSD. The trading pattern for BTCUSD is much less clear and is open to going either way over the next 2-3 days. I'm holding off on a OMGUSD trade until then.
gusccbb monkia
@monkia, Tks, it seems that BTC is doing its homework well.
looks like it is on the move
Very good! Nice and clear write up. Now how do I set an alarm on bittrex...