BTCUSD Update: I have been explaining my bearish reasoning while the price continues higher. Is it still bearish? Yes and I will use this chart to help explain why.
As I wrote in my previous BTC report, price is in the middle of a major resistance zone which is the 4203 to 4548 area (.618 of recent bearish swing). It is a very wide zone which means short term price action can work its way into the zone and appear to be bullish on smaller time frames. This type of price action is great for day trading because it is possible to take quick profits out of these fluctuations. I am not day trading though and looking to position myself for broader moves. Again if you want action, focus on day trades.
Within this resistance zone, there are even more specific levels to watch. The 4334 resistance in particular is one that is related to significant selling (look back at chart history). Price is hesitating here at the moment, which is NOT a short signal, but a possible starting point (especially to watch).
The other clue that keeps me bearish and prevents me from taking any new swing trade long positions is the wave count. My previous report shows the possible peak of the B Wave, and when the third leg of that wave (bullish Wave C) is evaluated, it is clearly showing a 5 wave structure which fits within guidelines of an ABC correction. A Waves and C Waves are typically motive. And once 5 waves are complete, the market is poised for the next wave to begin, which in this case is the bearish C Wave that I have been writing about.
Consider the clues: Price fluctuating within a major resistance zone, Wave C of a corrective B (lower high), and a price level 4334 that has proven to be a resistance before. All you need now is a reason. I mentioned this requirement for a catalyst before and one trader rattled off a whole list ranging from China, to ICO scams, etc. When I say we need a new catalyst, we need one that IS NOT PRICED IN yet. It has to be a new piece of information for the market. It could be anything that can spark the initial wave of selling. Just like the previous sell off was actually happening days before the China news reached the market.
I am NOT shorting these markets, but if I were, I would wait for a selling confirmation. Usually this happens once that catalyst is in play. The first thing I would look for is a break of 4032 (new .382 of bullish swing). Once that happens I will then look for a subsequent failed high. Another consideration for investors (besides going back to fiat), is to buy more cheap coins while your BTC can afford to buy more. This has NOTHING to do with swing trading, but something that I would consider because buying alt coins with BTC is an alternative way to be short BTC (I wrote about this a few weeks back). This assumes you have a long term investment plan for your portfolio of alt coins.
What if BTC keeps going higher? Anything is possible. A bullish catalyst can surprise the market and negate the bearish signs that are present. Like I explained in my previous report, TA is about evaluating clues and preparing for possibilities. As price action traders we must always be flexible and open to new information. If this market continues to push higher, I need to see the 4548 level get taken out before I start evaluating support levels for new longs.
In summary, the best we can do is define possibilities based on information the market provides (through price action) and prepare from there. At the moment, this market is still in a position that is poised to sell off, it is just a matter of a motivational spark. The initial selling may not even be that dramatic, and then the catalyst surprises the market. If I am wrong, and the market continues higher, I don't lose anything because I am not risking anything. Instead I adjust, and if this market is going to have a significant rally, it will offer plenty of swing trade opportunities.
Hi Marc ! Do you agree that we are in a 3-3-5 flat correction structured market ?
dalmazio
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@cigir, I'm thinking something very similar. Though I have it as an WXY correction, where X chains two ABC corrections as per Elliott Wave theory. So the first box, I have pretty much as you have, then the three wave upward structure I have labelled as X, then the next two waves as A and B of the final ABC structure, where we have not yet begun wave C.
KevinWatson
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@cigir, It's given no indication that it will follow this. Let go of the ad hoc patterns you apply. Looks at the patterns it forms. It just broke 4400.. which was a resistance point.
Give up thinking it's gonna tank because it's itching for another run. The A to B points trend on your chart have no indication of breaking.
MarcPMarkets
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@KevinWatson, I am just reporting the clues that I see on the bigger picture. Ad hoc? Elliott Wave is far from that. Hehe. 4400 is minor. We are in a zone. I follow what works for me, if you don't agree, that is fine, but do not try to assert your ideas on me. Just unfollow me and read an analyst who you agree with.
MarcPMarkets
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@KevinWatson, hehe sorry I misread your comment, so you don't have to unfollow me, there is no problem with not being in agreement, that is what makes a market. Thanks for sharing your point of view.
MarcPMarkets
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@cigir, Yes this is what I am seeing also. That is the bearish C Wave that I keep writing about. The small time frames are luring everyone into that. Very nice chart. Thank you for sharing.
KimJonUn
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ETHBTC has lost an important support.
MarcPMarkets
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@FabioDaSilva, that pair can be very confusing at times.