All posts by Lara

BTCUSD: Elliott Wave and Technical Analysis | Charts – 6th December, 2018

Last analysis on the 21st of November expected more downwards movement for Bitcoin, which is what has happened.

Summary: At this stage, Bitcoin may either bounce up to about 5,827 or move sideways. The bounce or consolidation may last about two to three months.

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

MONTHLY

Bitcoin Monthly 2018
Click chart to enlarge.

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.

WEEKLY

Bitcoin weekly 2018
Click chart to enlarge.

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.

DAILY

Bitcoin daily 2018
Click chart to enlarge.

Within cycle wave c, primary wave 1 may be complete.

Primary wave 2 would most likely subdivide as a zigzag and may end about the 0.618 Fibonacci ratio of primary wave 1.

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.

ALTERNATE ELLIOTT WAVE COUNT

DAILY

Bitcoin daily 2018
Click chart to enlarge.

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 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 82%. 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 and not only the daily chart, which is not the case at this time.

TECHNICAL ANALYSIS

Bitcoin daily 2018
Click chart to enlarge.

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 0.82. While this is deep, its corrections are usually deeper than this.

A bounce or consolidation may unfold for the short to mid term. This view is supported by:

1. On the 26th, 27th and 28th of November a Morning Doji Star unfolded.

2. RSI reached deeply oversold and there exhibited bullish divergence with price.

3. The short-term volume profile is bullish.

4. ADX reached very extreme and is now declining.

Support is identified on the chart.

Published @ 02:02 a.m. EST.

EURUSD: Elliott Wave and Technical Analysis | Charts – 5th December, 2018

Last Elliott wave analysis of this pair (August 2018) expected some upwards movement but price has 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

MONTHLY CHART

EURUSD Monthly 2018
Click chart to enlarge.

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.

WEEKLY CHART

EURUSD Monthly 2018
Click chart to enlarge.

Primary wave 1 subdivides as an impulse.

Primary wave 2 may be unfolding as an expanded flat correction. Within primary wave 2, intermediate waves (A) and (B) both subdivide as zigzags. 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.

DAILY CHART

EURUSD Daily 2018
Click chart to enlarge.

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 continuing a little lower as a double zigzag. Minor wave 2 may not move beyond the start of minor wave 1 below 1.12168.

TECHNICAL ANALYSIS

EURUSD Daily 2018
Click chart to enlarge.

Price has made a series of lower lows and lower highs since the 24th of September, the definition of a downwards trend. However, ADX does not indicate a trend for the short term.

The trend has some weakness as indicated by flat ATR.

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.

VOLUME ANALYSIS

EURUSD Daily 2018
Click chart to enlarge.

For the short term, the volume profile is bearish. The long upper wick on the last complete daily candlestick is also bearish. On Balance Volume has breached a short held support line giving a weak bearish signal.

Expect at least a little more downwards movement here.

Published @ 02:52 a.m. EST.


Careful risk management protects your trading account(s).
Follow my two Golden Rules:

1. Always trade with stops.

2. Risk only 1-5% of equity on any one trade.