BTCUSD Perspecitve And Levels: The Outside Bar Bearish Reversal.

2017年11月8日

BTCUSD Update: Higher low established at the 6900 area followed by a new upswing that has just spiked to 7900 and formed an outside bar. This is the Wave 5 of 5 that I have been writing about that may have exhausted its potential going into the fork over the next 8 days. Once the incentive is over, the environment will be setup for the beginning of a much larger correction. Especially now that an outside bar is present.

I like to describe Elliott Wave as a "road map" that gives us an idea of where we are within a trend. This information helps us to form realistic expectations about what is possible in the near future. (This is why I never paint rockets). Once I can confirm a count of 5 waves within Wave 5, I know that the next wave is most likely going to be a more serious correction because often the market goes into Wave A (the first leg of a corrective series).

That is the more straight forward part of using Elliott Wave, but it becomes more challenging when you are trying to figure out how deep the correction can go. That is called the magnitude of the wave. The reason why I am saying that once this 5 of 5 completes, this market is in position for a deep correction is because if you look at this market on a weekly chart, you will see that this entire rally coming from 150 per coin, will be completing 5 large degree waves. The chances of a large magnitude Wave A (aka deep correction) are very likely in this section of the "road map". You can think of this entire structure as a giant Wave 1, and we are about to go into a giant Wave 2 which THEORETICALLY can retest levels below 1k (this can take weeks or months).

Now that 7900 has been touched and the market immediately sold back to 6977 within hours is a very bearish sign. Outside bars are considered reversal patterns and for this one to appear at these levels within a Wave 5 of 5 adds to the argument significantly and can begin selling off even before the actual Segwit2X (Buy rumor, sell news). Not only is this price action showing an outside bar, but on larger time frames it appears as a pin bar. A break below today's low and we are in for selling of a larger magnitude.

Isn't 7900 is a new high? It is only 300 points higher than the previous high of 7600 which relative to this market is not that much higher. This can be interpreted as a failed high or double top variation and again another reason not only to avoid longs on the swing trade time frame, but also to expect a deeper correction soon. If price breaks below the outside bar, I will NOT be looking for any buying opportunities at the upcoming supports because I expect them to break. A decline to 6750 area will further confirm the initial leg of an A Wave which can be followed be a B Wave (bullish swing, lower high) going into the fork. After that, if this market has not broken higher (beyond 8k), and these current highs are still intact,it will be reasonable to expect a retest of the 6k level or lower in the following weeks.

In summary this market is now in position to sell off on a much larger degree. Being in a Wave 5 of 5 along with a blow off top (outside bar) and volume spike, (40k coins vs 10k average) in 4 hours are all bearish reversal signs. There will be plenty of smaller time frame retraces worth 100+ points which again is a day traders market. As far as swing trades go, I am now avoiding all together. Along with this bearish spike, the alts got a bullish spike which may also translate into a bullish reversal that may continue as BTC money stampedes for the exits. If YOU short these markets, now is the time to look for opportunities since structure is now in place. I will not be too surprised if the market begins to sell sooner than the fork, with a lower high forming into the fork day and then failing. Remember I am just estimating based on price structure, as long as price keeps generating bearish signals, I will be staying away from this market.

Comments and questions welcome.

2017年11月9日

註釋

Quick update: I learned about the fork cancellation after I published this analysis. I will address further in my next report, but I will say that without the fork, this market is now vulnerable to any bearish catalyst. More to come in my next report.