A pullback was expected to end about 1,235. Downwards movement for Friday reached 1,232.98 and then quickly reversed.
A correction for a second wave on the Elliott wave count was expected to have begun. So far this is starting out with some sideways movement, which still fits the overall expectation.
Last analysis on the 6th of December expected some sideways movement, which is what has happened.
Summary: Use the channel on the main daily chart. Assume more downwards movement while price remains within the channel. When the channel is breached, then assume a multi-month bounce or consolidation may begin that should remain below 7,234.83.
It would be safest to assume that the bear market will continue while Bitcoin remains below 7,234.83. The target is about 1,924, but it may be much lower than this; it is possible this bear market may see the end of Bitcoin.
The data used for this analysis now comes from Yahoo Finance BTC-USD.
Updates to this analysis are in bold.
Last analysis may be found here.
MAIN ELLIOTT WAVE COUNT
It is possible to see a completed five wave impulse upwards for Bitcoin.
I am unable to find reasonable Fibonacci ratios within this wave count. It appears that Bitcoin may not exhibit Fibonacci ratios very often between its waves, so this makes target calculation impossible. Classic technical analysis was used to identify a high in place on the 23rd of December, 2017.
What is very clear from this chart is that Bitcoin is a classic bubble. This looks like an even larger bubble than the Tulip Mania. The only thing about which I am certain is that this bubble will pop and Bitcoin will collapse.
Confidence that Bitcoin was most likely crashing started since the Forever trend line was breached in June.
Bitcoin tends to behave like an extreme commodity: price moves upwards for about 2 – 4 weeks in a near vertical movement at the end of its rises. Following this vertical movement the resulting downwards movement is very deep (in percentage terms) and often very quick.
The next rise begins slowly with basing action over weeks or months, and then as the rise nears its end another vertical movement completes it. Also, there are volume spikes just before or at the end, which is another feature typical of commodity like behaviour.
This has happened now several times. The most notable instances are the rise up to the week ending 24th November, 2013, and the week ending 5th June, 2011. The following sharp drops were 94% and 93% respectively.
If this current drop continues like the last two examples, then a reasonable target may be about $1,390.94 or below.
Super Cycle wave (II) would most likely be a zigzag, but it may also be a flat, combination or triangle; a zigzag would subdivide 5-3-5.
It is possible that cycle waves a and b may be complete within the expected zigzag of Super Cycle wave (II). Cycle wave a will fit as a leading contracting diagonal, and cycle wave b fits well as a running contracting triangle.
The target calculated expects cycle wave c to exhibit a Fibonacci ratio to cycle wave a. Bitcoin rarely exhibits Fibonacci ratios, so this target does not have a good probability.
Within cycle wave c, primary wave 1 may be incomplete.
Primary wave 2 may not move beyond the start of primary wave 1 above 7,234.83.
Unfortunately, Bitcoin rarely exhibits Fibonacci ratios in its actionary waves. Therefore, it is impossible to calculate a target. A best fit trend channel is drawn on the chart. An upwards breach of the channel would indicate that primary wave 1 should be over and then primary wave 2 should be underway.
Primary wave 2 may be subdividing as an expanded flat. Two targets are calculated at two different wave degrees.
Primary wave 1 lasted 41 sessions. Primary wave 2 may last about two to three months to have reasonable proportion to primary wave 1.
Primary wave 2 may not move beyond the start of primary wave 1 above 7,234.83.
SECOND ALTERNATE ELLIOTT WAVE COUNT
By moving the degree of labelling within cycle wave c up one degree, it is possible that the crash for Bitcoin could be over.
This alternate wave count has changed since the last published analysis. It now sees Super Cycle II over at the last low.
This wave count has a very low probability. It does not follow normal behaviour for Bitcoin.
Normal behaviour for an early second wave correction is for Bitcoin to retrace deeper than 90% of the first wave. This wave count expects that Super Cycle wave (II) was only 84%. While this is very deep, it is not as deep as is normal for Bitcoin.
A candlestick reversal pattern at the low of Super Cycle wave (II) would be fairly likely at the weekly chart level which is not the case at this time.
The following can be noted when looking back at Bitcoin’s behaviour during its previous strong falls in price:
The 94% fall in price from June to November 2011 was characterised by:
– Three clearly separate instances of RSI reaching oversold on the daily chart, separated by bounces.
– ADX did not remain very extreme for very long at all on the daily chart.
– On Balance Volume exhibited weak single bullish divergence at the low.
The 93% fall in price from November 2013 to February 2014 was characterised by:
– RSI reached oversold and remained deeply oversold for three weeks; at the low there was only single weak bullish divergence with price.
– ADX remained very extreme for the last seven sessions to the low.
– At the low, On Balance Volume did not exhibit bullish divergence with price; it remained bearish and then exhibited further bearishness after the low as it continued to decline as price began to rise.
For the current fall in price, the current Elliott wave count expects the fall to be larger in terms of duration than the previous two noted here, and at least equivalent in terms of price movement in that a fall of over 90% is expected now.
So far at the lowest low from the all time high Bitcoin has only retraced 0.84. While this is deep, its corrections are usually deeper than this.
For the short term, expect more downwards movement as likely. This is supported by volume. Downwards days have greater support from volume in recent movement.
Published @ 04:56 a.m. EST.
More sideways movement was expected for the very short term. This pattern may now be identified on the daily chart. The measured rule is used to calculate a target.
Sideways movement in a small range fits the short-term expectation from the Elliott wave count. Volume today supports the preferred Elliott wave count.
Last Elliott wave analysis of this pair (December 5th, 2018) expected some upwards movement but price has again mostly moved sideways.
Summary: Upwards movement for another two or so months to 1.2046 – 1.20761 is expected.
Changes to this analysis are in bold.
ELLIOTT WAVE ANALYSIS
The (0) is from where the wave count begins.
A large zigzag can be seen complete at the low in March 2015. This is labelled Super Cycle wave (w).
A low now below this point indicates that the larger structure downwards is incomplete. The Elliott wave structure that fits best here is a double zigzag.
The first zigzag in the double is complete; it is labelled Super Cycle wave (w). The double is now joined by a complete three in the opposite direction, an expanded flat labelled Super Cycle wave (x). Because Super Cycle wave (x) ends just short of the cyan bear market trend line, it looks like it is over there.
Super Cycle wave (y) is most likely now to unfold as a zigzag.
While double zigzags and double combinations are labelled the same, W-X-Y, they are very different structures.
Double zigzags, like single zigzags, normally have a strong counter trend slope. To achieve this their X waves are usually brief and shallow. The second zigzag in the double usually moves reasonably beyond the end of the first zigzag, so that the whole structure has a strong slope.
Double combinations are sideways movements. To achieve a sideways look their X waves are usually deep and can also often be time consuming. The second structure in the double usually ends about the same level as the first, so that the whole structure takes up time and moves price sideways.
Here, Super Cycle wave (x) is relatively shallow. This indicates a double zigzag is most likely unfolding lower.
The bear market trend line may be expected to continue to provide resistance while the bear market for EURUSD remains intact.
The strongest piece of technical analysis on this chart is the cyan trend line. The fact that it was tested and recently held in February 2018 indicates this line has strength. Any strong bounces within the ongoing bear market may be expected to find strong resistance at this trend line.
Primary wave 1 subdivides as an impulse.
Primary wave 2 may be unfolding as an expanded flat correction. Within primary wave 2, intermediate wave (A) subdivides as a double zigzag and intermediate wave (B) subdivides as a single zigzag. Intermediate wave (C) should subdivide as a five wave structure.
The most common Fibonacci ratio is used to calculate a target at intermediate degree for intermediate wave (C) to end. This is very close to the 0.618 Fibonacci ratio of primary wave 1.
If primary wave 2 moves above the target or is long lasting enough, it should find strong resistance at the cyan trend line that is copied over from the monthly chart.
This daily chart focusses on the structure of primary wave 2.
Intermediate wave (C) must subdivide as a five wave structure. Within intermediate wave (C), minor wave 1 may be complete.
Minor wave 2 may be a complete zigzag. If it continues further, minor wave 2 may not move beyond the start of minor wave 1 below 1.12168.
Minor wave 3 may only subdivide as an impulse. Within minor wave 3, minute wave i and ii may be complete. Minute wave ii may be complete as an expanded flat. A third wave at two degrees is expected; the third wave should see an increase in momentum
Click chart to enlarge. Chart courtesy of StockCharts.com.
Currently, price is within a smaller consolidation with resistance about 1.146 and support about 1.128. It is an upwards day during this smaller consolidation that has strongest volume suggesting an upwards breakout may be more likely than downwards.
For the very short term, expect a little more downward movement to support.
Sideways movement since the last low on the 12th November has the strongest volume for an upwards day on the 15th of November. This suggests an upwards breakout is more likely.
On Balance Volume is constrained. Watch it closely as it may give a signal in the next few days.
Published @ 01:05 a.m. EST.
Careful risk management protects your trading account(s).
Follow Lara’s two Golden Rules:
1. Always trade with stops.
2. Risk only 1-5% of equity on any one trade.
For the short term, a small pullback was expected to continue. This is exactly what is happening.
For the short term, a small pullback was expected to begin the new trading week. A red daily candlestick represents overall downwards movement for Monday’s session.
Price remains range bound.
A new Elliott wave count this week has a good fit.