The Elliot Wave road to $3k or $20k+
Updated
I see two likely scenarios ahead, one to the moon and one to oblivion, with a third less likely being a period of sideways price movement at current levels.
3k or less (posted above)
BTC has completed 3 Primary Waves down to 6k, with Primary Wave 2 being a bear trap at 17k. The euphoria since the bounce at 6k was the Primary Wave 4 retrace, completed as a 5-3-5 ABC wave. The retrace bounced off the long term down trend line (purple) that has been in place since Christmas. It has now moved into a new Primary 5 wave impulse down and has or is about to complete its Minor Wave 1. This may lead into an ABC retrace to retest the trend line before completing the rest of its waves down to around 3k. The chart shows the likely levels using standard EW theory and fib measurements. The 3k was a long term trading area during 2017 and seems like a realistic area to find support.
20k or more
BTC has completed a corrective ABC set of waves down to 6k. The euphoria since the bounce at 6k has been justified because it has just entered the first of 5 impulse waves back up to and possibly beyond 20k. The current retrace is normal market behaviour after a doubling in value in just under 1 month. This has either completed its retrace or will continue down to between $6-8k before entering the big third wave up to 17k and beyond.
Side Way Price Movement
There is also a scenario that has no extremes and trades within a range over time, gradually breaking down the long term diagonal trend line.
My Plan
I sold out of all my coins a few days ago when I saw the latest wave up failing. I honestly have no idea which one will play out and do not want to bet big on either without managing my risk. I will likely look to short ahead of dips and buy again on the up waves. However, I will do this by closely monitoring the price action and accepting that I will have to use stop losses which will erode my portfolio value and will likely under perform either just selling or just hodl (Holding On for Dear Life). However, for my situation, I am comfortable accepting some under performance to insure against the oblivion.
For those not able to trade frequently it may be prudent to either sell out now or wait for the next retrace and sell out at that point. Then wait for the long term trend line to be clearly broken with a new impulse wave. There will be a trade off on upside for this but it will offer protection from the 3k scenario. However, this could be difficult to manage if the Side Wway Price Movement scenario unfolds.
3k or less (posted above)
BTC has completed 3 Primary Waves down to 6k, with Primary Wave 2 being a bear trap at 17k. The euphoria since the bounce at 6k was the Primary Wave 4 retrace, completed as a 5-3-5 ABC wave. The retrace bounced off the long term down trend line (purple) that has been in place since Christmas. It has now moved into a new Primary 5 wave impulse down and has or is about to complete its Minor Wave 1. This may lead into an ABC retrace to retest the trend line before completing the rest of its waves down to around 3k. The chart shows the likely levels using standard EW theory and fib measurements. The 3k was a long term trading area during 2017 and seems like a realistic area to find support.
20k or more
BTC has completed a corrective ABC set of waves down to 6k. The euphoria since the bounce at 6k has been justified because it has just entered the first of 5 impulse waves back up to and possibly beyond 20k. The current retrace is normal market behaviour after a doubling in value in just under 1 month. This has either completed its retrace or will continue down to between $6-8k before entering the big third wave up to 17k and beyond.
Side Way Price Movement
There is also a scenario that has no extremes and trades within a range over time, gradually breaking down the long term diagonal trend line.
My Plan
I sold out of all my coins a few days ago when I saw the latest wave up failing. I honestly have no idea which one will play out and do not want to bet big on either without managing my risk. I will likely look to short ahead of dips and buy again on the up waves. However, I will do this by closely monitoring the price action and accepting that I will have to use stop losses which will erode my portfolio value and will likely under perform either just selling or just hodl (Holding On for Dear Life). However, for my situation, I am comfortable accepting some under performance to insure against the oblivion.
For those not able to trade frequently it may be prudent to either sell out now or wait for the next retrace and sell out at that point. Then wait for the long term trend line to be clearly broken with a new impulse wave. There will be a trade off on upside for this but it will offer protection from the 3k scenario. However, this could be difficult to manage if the Side Wway Price Movement scenario unfolds.
Note
*IF* we do go up from here (and I dont think we will yet), the pressure that will be created by the head and shoulders pattern plus the long term trend line may be hard to over come.Note
I dont know which way BTC will go and I want to be prepared for both scenarios. So how can I have my cake and eat it? Simple, one must be prepared to pay some insurance premiums in stops. However, these need to be measured and placed with orders against appropriate structure from price action, Elliot waves and fib targets.BTC has completed two sets off 5 impulses down and has put in place a double bottom. This has given strength to the bulls, but it is now consolidating around the local high at 9600. This may go on to break up but I would not be looking to add a trade at this stage because there is no logical stop and the risk reward does not stack up.
It is reasonable to expect a retrace again to between 0.5 and 0.718 and I would be looking to enter a buy trade at this point on a clear sign of a reversal (1HR TM). My Stop would be under the local 8.4k low / double bottom. This would trigger a cancelling of the buy + a short.
I am also looking to enter a sell / short at around 11k (between 0.5 and 0.718) retrace of this bear structure. In terms of an EW structure, this would represent a simple A (11-8.4) B (8.4-11k) C (7k). The stop and buy would be a breakout of the 11.7k double top.
This is high risk trading and I will be doing this using stops with support from structure. The stops may mean I erode my portfolio and the structure means I may miss out on some potential trades. This works for my trading plan and I am willing to accept that.
Note
The last price action did exactly as I anticipated with a good set up for a buy. Unfortunately my vacation meant I missed the trade. The set up I am looking for now is for price to continue up to around 10.4-10.8k and show signs of a reversal to allow me to short. The stop would be at around 11.8k with a target of 7.5k. R:4. It is more likely to reverse earlier at 10k but I will not trade this because the stop would need to be in the same place (11.8k) and the risk reward not high enough.
It may have completed the retrace and be entering a new bear wave down with a small retrace on it. In that case I would look to buy the break out at around 8.2k.
Note
BTC is stuck in a consolidation period and I still can't guess which way it will go. However, I am beginning to see signs of 1HR RSI divergence and this consolidation period could just have created enough energy for the next drive down. I have updated the wave count (orange) to show we could have completed an ABC on the bear wave down and have entered and already completed wave 1 of the final impulse down.Given this, I will be looking to short in two places. The first is a break below 8800, which is the recent low and would be the top of this first Minor Wave 1. The second is a break below 8300, the low of this complete bear structure.
Entry: 8800
Stop: just above the grey diagonal up trend line (e.g. 9200)
Target:7800
Entry 8300
Stop: 8800
Target: 7800
Note
The entry figures above are not precise, I'll be looking for price action to determine the exact entry.Trade active
Entry: 8711 & 8272Stop : 8855
Target 7,500
Note
Price action I will be targeting over the coming weeks. Ignore the timing.Note
Bigger picture count...Note
Trade active
A fake breakout on the consolidation triangle, pulling the retrace to slightly higher than 0.382. I shorted further on 8390.Short term target is now 7300-7400.
Note
Lots of talk about the G20 meetings on Monday and Tuesday that could act as a reversal trigger. I can see 4 waves rather than 3 in this 5th wave. It could well be over. But it could be setting up for an extended 5th (which would have 9 subwaves). I'm continuing to let the short ride and just keep bringing the stop down with each wave. New stop is at 7555. Note
My stop was executed at 7555 for a tidy profit. Is this a reversal on the larger picture? It could be, but until I see further confirmation I will continue to trade bearish. To move to bullish, I want to see the long term down trend line broken (and held) and the recent wave 2 on my chart broken. These coincide at around 10k.My next trade will be when I see a completion of an ABC from the recent wave down to 7.2k. Leg A is done. B may just consolidate around these 8.2-8.4k or will preferably retrace to around 7.7k. I'll adjust my target short once I see what happens with this B leg.
Note
This is still on progress for the plan from yesterday. There is resistance forming on both price action and RSI. It may go straight up from here. However a retrace could come soon and will present a buy opportunity if it goes as far as the 0.786 level (7.6k). This will give a nice risk reward on a trade with a target of 9.8k and stop at the low of 7.3k (R:6).Note
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