BTCUSD - POSSIBLE CYCLE COMPLETION WITH LIMITED UPSIDE
In my last chart (link below) a retracement bounce with target of 380 zone did not play out as anticipated even though we have now bumping into 340 zone.
During this period with both up and down swings, many chartists using differing methods are suggesting that we have formed a major low and are now in new "Bullish Cycle". Several have asked if there is any case I could make to justify this.
"DOW Theory" looks for series of LH & LL, OR HH & HL to denote up &down trends. One important thing to remember is, what cycle degree are we referring to and within the same cycle degree powerful rallies or declines could take place without altering the overall trend.
Note in the chart below on Daily time frame: we have series of LL & LH since Nov 2013 high. This means that based on DOW theory, at this degree, we are still in bearish cycle and change would not be confirmed till we get a new high above June 2014 high (700 zone) with subsequent HL being formed on any retrace.
However, since Jan 2015 low we are in intermediate bullish cycle according to DOW theory in that we have a High (25th Jan 2015) & Higher Low (Aug 2015) and now forming a Higher High. Does that in it self suggest that we will continue to see series of new HH & HL? Also consider that since 31st Jan 2015 low, we don't actually have series of HH & HL. Rather we have HH & LL so far. Does this suggest Bullish cycle behaviour according to Dow theory? I am not sure if it could be argued to say yes.
Based on EW theory, it seems that we have larger WYX zigzag from Nov 2013 high to Jan 2015 low, which could be labelled as possible Wave A completion. If correct then retracement bounce since, is likely a wave B (which technically can retrace much higher) suggesting that once complete, we would expect to see a strong 5 wave move to the downside for Wave C, OR continue to chop about in some complex corrective pattern in this range. Since that major low every up & down swings appears to be of 3 minor swings. It lacks any signs of showing clear 5 wave move up as essential for any new bullish cycle to develop.
In Summary, we have 2 possible scenarios both suggesting limited upside and at least a retest of the Jan 2015 lows or new lower low to follow as detailed below:
Scenario 1: ABC zigzag with Wave C in the form of Megaphone or expanding ending diagonal (see schematic diagram on the chart). If correct then we might be close to making reversal in the 340 -350 zone.
Scenario 2: Expanded Flat in the form of 3-3-5 construction (see schematic diagram on the chart) which could be still be ABC zizgag of the Jan 2015 low. If correct then we have wxy [3 swings] to Wave (a), Wave (b) also of 3 swings and now in progress to complete Wave C with 5 waves in the form of possible expanding diagonal of 3-3-3-3-3 construction. In this event we could be near completing wave 3, a retrace for wave 4 and wave 5 to follow to the upside to complete this cycle.
Upon completion, we could develop more complex sideways correction OR have strong 5 wave decline to retest Jan low or make new lower low around 100 zone as being in proximity of wave 4 of one cycle degree lower as suggested by EW guidelines.
Warning: This is my interpretation of price action using TA approach that I consider helps me most but could be completely wrong. Therefore as always, do your own analysis for your trade requirement and ignore my views.
For those who appreciates my analysis, select to follow me and the chart for notification of future updates. Indicate you like my analysis by thumbs up, comments and sharing it with others. If you have an alternative idea then please be constructive and share for all to learn from.
Thank you for taking the time to read my analysis.
DanV
danv-charting.com
During this period with both up and down swings, many chartists using differing methods are suggesting that we have formed a major low and are now in new "Bullish Cycle". Several have asked if there is any case I could make to justify this.
"DOW Theory" looks for series of LH & LL, OR HH & HL to denote up &down trends. One important thing to remember is, what cycle degree are we referring to and within the same cycle degree powerful rallies or declines could take place without altering the overall trend.
Note in the chart below on Daily time frame: we have series of LL & LH since Nov 2013 high. This means that based on DOW theory, at this degree, we are still in bearish cycle and change would not be confirmed till we get a new high above June 2014 high (700 zone) with subsequent HL being formed on any retrace.
However, since Jan 2015 low we are in intermediate bullish cycle according to DOW theory in that we have a High (25th Jan 2015) & Higher Low (Aug 2015) and now forming a Higher High. Does that in it self suggest that we will continue to see series of new HH & HL? Also consider that since 31st Jan 2015 low, we don't actually have series of HH & HL. Rather we have HH & LL so far. Does this suggest Bullish cycle behaviour according to Dow theory? I am not sure if it could be argued to say yes.
Based on EW theory, it seems that we have larger WYX zigzag from Nov 2013 high to Jan 2015 low, which could be labelled as possible Wave A completion. If correct then retracement bounce since, is likely a wave B (which technically can retrace much higher) suggesting that once complete, we would expect to see a strong 5 wave move to the downside for Wave C, OR continue to chop about in some complex corrective pattern in this range. Since that major low every up & down swings appears to be of 3 minor swings. It lacks any signs of showing clear 5 wave move up as essential for any new bullish cycle to develop.
In Summary, we have 2 possible scenarios both suggesting limited upside and at least a retest of the Jan 2015 lows or new lower low to follow as detailed below:
Scenario 1: ABC zigzag with Wave C in the form of Megaphone or expanding ending diagonal (see schematic diagram on the chart). If correct then we might be close to making reversal in the 340 -350 zone.
Scenario 2: Expanded Flat in the form of 3-3-5 construction (see schematic diagram on the chart) which could be still be ABC zizgag of the Jan 2015 low. If correct then we have wxy [3 swings] to Wave (a), Wave (b) also of 3 swings and now in progress to complete Wave C with 5 waves in the form of possible expanding diagonal of 3-3-3-3-3 construction. In this event we could be near completing wave 3, a retrace for wave 4 and wave 5 to follow to the upside to complete this cycle.
Upon completion, we could develop more complex sideways correction OR have strong 5 wave decline to retest Jan low or make new lower low around 100 zone as being in proximity of wave 4 of one cycle degree lower as suggested by EW guidelines.
Warning: This is my interpretation of price action using TA approach that I consider helps me most but could be completely wrong. Therefore as always, do your own analysis for your trade requirement and ignore my views.
For those who appreciates my analysis, select to follow me and the chart for notification of future updates. Indicate you like my analysis by thumbs up, comments and sharing it with others. If you have an alternative idea then please be constructive and share for all to learn from.
Thank you for taking the time to read my analysis.
DanV
danv-charting.com
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