Capitulation occurs when an important support level seems ultimately inevitable and technical traders cancel all their buy orders above that level and shift them down to that support level. The lack of demand above those levels leads to accelerated momentum and the eventual "waterfall" near most local bottoms coupled w/ maximum fear and a spike in the VIX. I don't see these situations so much as panic selling but rather buyers all consolidating their buying power around a widely agreed level.
I believe that support level is the 200 week moving average (Where most corrections have ended) and around the top of prepandemic levels in the S&P. I've labeled the current leg down as wave Y is an WXY wave 3 of A. A measured move of W puts it right at around the capitulation support that I'm expecting. I'm seeing wave 2 as a flat so expecting a rip-ur-face-off sharp for wave 4 here (or could be a B?)... and likely the biggest bear market rally yet for this correction.
Major cryptos have already hit their 200 WMAs as of today... If I'm right, they should sink a bit in the coming days but start to show signs of recovery prior to the boarder market as was the case in January.
Too early - these markets are going significantly lower . 2800 is a good call but Jan 23 is too late - will get there sooner - more like September
chinawildman
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@mjcpaull, I didn't draw the impulse to time scale so just ignore that... Not saying it's a buy and hold at the 200 WMA, but I am expecting a significant bounce there.