So If you've been following me for a while you know that I think there's still quite a bit more left in this correction for Bitcoin 0.62% ... With a $3k target, we still havent quite seen a capitulation drop to shake weak hands within the market yet. In terms of the over all correction, it just makes sense for Bitcoin 0.62% to correct for a much longer time to compensate impulsiveness and parabolic move of the last bull market to $20k.
What I see here is that BTC 0.62% is in fact nearing a bottom. But its still a couple of months away in my opinion. We're likely to see the lower $5k area pop up within the next few weeks, but I want you all to notice some of the changes I've made to the overall wave count. Since the beginning I've declared the first portion of the correction as an ABC expanded flat into a WXY double 3 pattern. I had then assumed that we may have been in a triple 3 WXYXZ for the correction, parted by another WXY. But after review the chart and messing with a different variation of that count I've come up with what you see above. To me, it makes more sense and fits the "look" of elliot waves when it comes to proportion of extensions and time base.
So what makes this count a bit better is the extension. The extension from the ATH -0.47% at $20k, to the W wave with the retrace of the "X" positions (in orange) we get an extension for the "Y" wave (orange) of just under 1.272. Those extensions are in Black. That double 3 would conclude our first Cycle W (black) for the first portion of the correction of what I believe is a double 3 WXY (black).
Note: A WXY is an elliot wave corrective pattern where there are TWO ABC formations, also called a "double 3".
Now within each WXY (orange) lies the (blue) ABC corrective pattern where the C wave hits an extension of .786 from waves A to B. Those extensions are in White. Now historically, BTC 0.62% favors a .786 extension for its C waves when in the downward trend.
This is a very long A wave that we're currently on. I didn't think we'd actually do something of that sort when I made my previous analysis, but it seems that that's going to be the case here. Check that analysis out "BTC Roadmap (Part 5)".
So with each extension from December onward, we can basically assume that similar extensions are to come, and that's where I'm using them for this supposed wave count here. Also taking rough extensions from A to B (blue - that we dont have yet) for our C wave will likely be adjusted over time. On the larger scale wave count from back in 2014, we know that wave 2 on the extended 5th wave is sitting at $3k even. Well, when 5th waves are extended, then the correction typically draws back down to the bottom of subwave 2 of that extended move. By elliot wave guidelines, support and resistances, and extensions, everything is STILL calling for a 3k bottom, from what I have been saying since roughly March or so.
Now, lets talk about the stuff that's not showcased on this chart. One thing I want to talk about is volume and volatility . It's pretty apparent that both have decreased dramatically since December. It represent several things, but one thing volume shows is just a decrease in traders. I can't tell you how many traders I KNOW have been taken out of this market since the big drops from December. It's the bigger players', the market makers, job to take the little guys out in this market. They have to find liquidity to keep the market moving. Traders are dwindling out of the market and its really just leaving the hodlr's as the majority of the retail investors within the market. Market makers need stillness within the market in order to have an easier time to accumulate. There's a limited supply on BTC 0.62% , so what they WANT to do is decrease as many filled seats as they can before the ride takes off. That's where Capitulation comes in. We've only seen a part of it in the first portion of this correction in February. But since then we haven't quite seen it yet......
What I see here is that BTC 0.62% is in fact nearing a bottom. But its still a couple of months away in my opinion. We're likely to see the lower $5k area pop up within the next few weeks, but I want you all to notice some of the changes I've made to the overall wave count. Since the beginning I've declared the first portion of the correction as an ABC expanded flat into a WXY double 3 pattern. I had then assumed that we may have been in a triple 3 WXYXZ for the correction, parted by another WXY. But after review the chart and messing with a different variation of that count I've come up with what you see above. To me, it makes more sense and fits the "look" of elliot waves when it comes to proportion of extensions and time base.
So what makes this count a bit better is the extension. The extension from the ATH -0.47% at $20k, to the W wave with the retrace of the "X" positions (in orange) we get an extension for the "Y" wave (orange) of just under 1.272. Those extensions are in Black. That double 3 would conclude our first Cycle W (black) for the first portion of the correction of what I believe is a double 3 WXY (black).
Note: A WXY is an elliot wave corrective pattern where there are TWO ABC formations, also called a "double 3".
Now within each WXY (orange) lies the (blue) ABC corrective pattern where the C wave hits an extension of .786 from waves A to B. Those extensions are in White. Now historically, BTC 0.62% favors a .786 extension for its C waves when in the downward trend.
This is a very long A wave that we're currently on. I didn't think we'd actually do something of that sort when I made my previous analysis, but it seems that that's going to be the case here. Check that analysis out "BTC Roadmap (Part 5)".
So with each extension from December onward, we can basically assume that similar extensions are to come, and that's where I'm using them for this supposed wave count here. Also taking rough extensions from A to B (blue - that we dont have yet) for our C wave will likely be adjusted over time. On the larger scale wave count from back in 2014, we know that wave 2 on the extended 5th wave is sitting at $3k even. Well, when 5th waves are extended, then the correction typically draws back down to the bottom of subwave 2 of that extended move. By elliot wave guidelines, support and resistances, and extensions, everything is STILL calling for a 3k bottom, from what I have been saying since roughly March or so.
Now, lets talk about the stuff that's not showcased on this chart. One thing I want to talk about is volume and volatility . It's pretty apparent that both have decreased dramatically since December. It represent several things, but one thing volume shows is just a decrease in traders. I can't tell you how many traders I KNOW have been taken out of this market since the big drops from December. It's the bigger players', the market makers, job to take the little guys out in this market. They have to find liquidity to keep the market moving. Traders are dwindling out of the market and its really just leaving the hodlr's as the majority of the retail investors within the market. Market makers need stillness within the market in order to have an easier time to accumulate. There's a limited supply on BTC 0.62% , so what they WANT to do is decrease as many filled seats as they can before the ride takes off. That's where Capitulation comes in. We've only seen a part of it in the first portion of this correction in February. But since then we haven't quite seen it yet......
Comment:
What I want to talk about here is BTC's wave count in confluence with the 55 and 200 EMAs. Ive noticed during this downtrend since April that typically the SUBwave retraces (on waves 2 and 4) fall back to the 55 EMA on the 4 hour chart. And the minuette waves 2 and 4 hit on the 200 EMA. We've already seen a 2 hr EMA crossover on the recent drop from 6800, so its an additive to the bearishness of BTC's momentum. However, the current movements show that BTC is making some sort of an effort to keep going up. The 2hr MACD hasn't crossed over since the 13th and it's leveling shows that bulls don't have much control here and when it crosses over it could get ugly.
So what I'm looking for is a rejection under $6400 to see how Bitcoin handles its next support levels. It first needs to hold $6250 to stay bullish. But if it breaks the last low under $6100 then it may not find support until the $5850 area. But I believe that if it breaks $6100 then its more likely to trail down to $5k. Notice with EW that when wave 3 is extended, 5 tends to look more like 1, and thats kind of the setup we're looking at here. SUBWave 1 back early May didn't break market structure and set up with a small retrace on wave 2. That's pretty much what we're getting here. If this low is taken out violently, then it could get relatively ugly. It's hard for me to stay bearish because of the confirmed bullish divergence on the daily RSI, but averages, price action and historic movements kind of point downward for BTC.
What I want to talk about here is BTC's wave count in confluence with the 55 and 200 EMAs. Ive noticed during this downtrend since April that typically the SUBwave retraces (on waves 2 and 4) fall back to the 55 EMA on the 4 hour chart. And the minuette waves 2 and 4 hit on the 200 EMA. We've already seen a 2 hr EMA crossover on the recent drop from 6800, so its an additive to the bearishness of BTC's momentum. However, the current movements show that BTC is making some sort of an effort to keep going up. The 2hr MACD hasn't crossed over since the 13th and it's leveling shows that bulls don't have much control here and when it crosses over it could get ugly.
So what I'm looking for is a rejection under $6400 to see how Bitcoin handles its next support levels. It first needs to hold $6250 to stay bullish. But if it breaks the last low under $6100 then it may not find support until the $5850 area. But I believe that if it breaks $6100 then its more likely to trail down to $5k. Notice with EW that when wave 3 is extended, 5 tends to look more like 1, and thats kind of the setup we're looking at here. SUBWave 1 back early May didn't break market structure and set up with a small retrace on wave 2. That's pretty much what we're getting here. If this low is taken out violently, then it could get relatively ugly. It's hard for me to stay bearish because of the confirmed bullish divergence on the daily RSI, but averages, price action and historic movements kind of point downward for BTC.
Comment:
We've seen a pull-up in price on BTC as it broke out of the $6400 zone which the bulls needed to stay bullish. I'm expecting $6800 to be taken out and $7.4k to be the target now...
It means that after we drop down to the 3k area, then we'll get a big "dead" period of sideways action for what I think could be as long as 2-3 months. That'll be the accumulation period. Once we get our bottom at 3k, we shouldn't drop below it again, but it is very possible that'll happen. So far you've probably seen exchanges from around the world that have dropped massively in volume and aren't very lively in what Crypto "used to be". Its just a part of the cycle. The bad coins will be taken out, some miners will go out of business, and everything will look like sh*t.
But trust me... In market cycles like these - that entail parabolic moves, typically things look like sh*t before they start to look like gold. So far the extent of this minor downtrend since late april has been very slow and drawn out. We should see a nice lift in the market afterwards for maybe $1,500 points or so, but that will be before the actual capitulation drop. A news catalyst may come out at that time, but its just to drop the price in a way to scare hodlr's and remove weak hands from the market... Opening up seats for the big players. That should be a quick drop and the bottom should align with September if we're lucky. I don't want to get too bearish but I definitely dont want to be bullish in this scenario. The best way to handle this is to have caution.
There's a lot of support from $5k and below, so it'll be hard to displace all of it, but I'm thinking that it may not have too hard of a time doing so.
So, that's pretty much all I think I wanted to say... The bottom (as said for the past several weeks) should be coming in September, with the next bull market really not getting a big lift off until 2019.
Follow me on twitter for all the short-term updates on everything Crypto and Forex. @CryptoEball.
Thanks guys, and safe trading!