BTCUSD Update: 4212 to 4548 resistance zone implies limited upside and the possibility of a being the price area where a broader Wave C can begin.
In my previous report about ETHUSD, I wrote about a Wave B high at 315 which once established, prompted me to stay away from any long swing trades. The bullish structure is not that bullish and overall it is a lower high. I checked the BTC chart as well and the current resistance adds to the bearish argument even further.
In this chart, I want to show the Elliott Wave count similarity, potential levels of where this count can lead price, and confirmation levels to know if this market is most likely in a bearish C Wave. Keep in mind, for those of you who are less experienced and expecting the certainty of a weather forecast, you need to understand, technical analysis does not provide any certainty. It provides CLUES as to what scenario is more likely to happen compared to a population of countless scenarios. By having an idea or "Perspective" of what this market can do, you can better prepare IF the market chooses this scenario.
The goal is to simplify the decision making process to something like, "If market does this, I do that. If market does not do this, then I do nothing.". Reacting to the market based on impulses, or how YOU interpret news, is completely irrelevant to the market and is the best way to achieve inconsistent and random results.
Presently this market is fluctuating in a major resistance zone. 4212 to 4548 is the .618 of the recent bearish swing. Price action and short term structure may appear bullish at the moment, but the resistance, on top of the wave count seriously counter the bullish argument. This price area is a very convenient location for a B Wave to peak which presents a great deal of risk for any new long positions. The reason is the C Wave has the potential to retest the low 3000s and even the low 2000s. Of course in order for that to unfold, there will be strong catalyst or series of catalysts in the market. Often the bearish signals are in place before the news comes out.
The level that I am watching to confirm the bearish momentum is 3976 (.382 of most recent bullish swing). A break below that, and the next support to test is the 3481 to 3260. How will I use this information? First, no swing trade longs in any alt coins, even if reversal patterns show up at support levels. And IF the market offers the opportunity to buy at extreme prices like 3000 or below, I will be looking to buy for the long term. There is no precision to that, and now way to know where the bottom is (this is an investment, not a swing trade).
Now if I am wrong, the market will have to prove its strength by pushing above this 4212 to 4548 resistance zone. IF this happens, THIS IS NOT A BUY SIGNAL. This price action simply serves as a clue that points to further strength. In that scenario, I reevaluate and find the next best support level. I do not care if price has to go up 300 points without me to prove itself. If you find yourself caught up in the idea of "I'm missing out" then you still have a lot to learn about trading. Also if you are looking for "action", swing trading is probably not a good style for you.
In summary, as hopeful and hype full as people are at the moment with this market flirting with the 4200 level, the bigger picture presents a different story. Elliott Wave shows that there is more potential of a B Wave completion, followed by a bearish C Wave, rather than a retest of 5000. A break of the 3976 level will be the first confirmation, followed by a retest of the 3481 to 3260. If the market chooses otherwise, it will have to clear 4548 in which case I reevaluate and look for new support levels to work with. I always keep an open mind and do not worry about what I am "missing out" on. I simply analyze the clues that appear in the price action, and adjust as new information becomes available.
"As hopeful and hype full..." — nice. This is the hardest part for new traders to learn: how not to get caught up in the fear of missing out. There will always be price swings, whether we go to 2k or 6k, and therefore there will always be an opportunity to profit, regardless of where we're going. If we get this basic idea, then it takes away all the FOMO, and if you miss bottoms and tops, no biggy. All we have to wait for is a clearly trending environment. Thanks for the analysis!
MarcPMarkets
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@dalmazio, I could not have explained it better myself. People should copy what you just wrote and paste it to their computer screen.
gciriaco
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I hope you are wrong bro... But this type of correction is necessary for a healthy market. I am gonna begin considering cash and short everything... My ABC is a bit larger, possible too?
RBmooney
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@gciriaco, i cashed out 97% of my portfolio two weeks ago, missed out on the recent gains but id rather be able to sleep at night. For me, the risk to reward ratio is far too high.
gciriaco
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@mooneymoonman, good. I think we are adding too many ICO's. That is killing the market. I think the main projects are gonna star getting more strength. The supply is way larger than the demand...
@mooneymoonman, you are never going to buy the bottom or sell the top. Be happy to come out ahead. There will be more opportunities to get back in for the big picture.
RBmooney
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@MarcPMarkets, ive no doubt about it, these opportunities could be only days away. Being a noob who has made so many noob mistakes ive learned to not only acquire a balanced view point but also patience, its why im so grateful for your analysis, it has preserved me from making the same mistakes as those who've chosen to buy the hype.
MarcPMarkets
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@gciriaco, well you are using average range bars on a weekly. Not sure how you projected the corrective structure, but interesting though, Thanks for sharing.
gciriaco
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@MarcPMarkets, A wave .382 - B Wave .236 C wave .618 to .786