What has happened so far?
We completed the 5 waves up to 11.8k. My conviction is that we have completed an wave down, the wave count is shown on the chart.
What could happen next?
This is where it gets very complicated. Assuming my wave count is correct, following EW theory, we could now have any one of the following:
1) Double or triple . The first done, now up for X. X can be almost anywhere lower than 11.8k. Then down again for another similar .
2) We have completed the correction and are now moving into another 5 wave impulse that will take us through 12k and likely 13k+.
What does this mean?
EW analysis in this type of correction is not particularly helpful until the formation becomes clearer. I am looking for key resistance areas that could reverse this recent up wave. As that materialises, I will try and understand what wave structure is unfolding and therefore what the most likely scenarios are. 10.8-11.2k now seems like a key area because:
- 0.786 - 0.618 retraction of the recent retrace wave
- on the way up and on the way down
- Top of (b) leg and wave 3
- Overlaps with the long term downward (pink)
I think the long term will be the deciding factor, so I hope to narrow this target down depending on how quickly we get to this area.
I like to understand the mentality of who will short in this area and can see that with a SL at the local high (11.8k) and a target of 9k (0.5 fib), there is a of R3.5.
Unless these is a relatively big pause or step down on the way up to 10.8-11.2k, I find it very hard to believe we will not at least have a minor reversal here back to 10.3k. I will therefore look to sell my recent purchase around this area for a 15%+ profit. I will also sell some of the remaining BTC I purchased at an average of 8.5k.
I will then wait out to see what happens and get a better understanding of the type of waves forming - a new impulse up or the X with the Y leg down.
I have to let the market show me, but my conviction is a scenario where we complete the X leg up to 10.8-11.2k and the final Y leg down to 9k. This will present another good buy opportunity.
*** I initially had this option:
3) Expanding triangle. We have done and now doing (d) then (e). (d) will go higher than (b) 10.8k and then down for (e) lower than (c) 9.5k.
I ruled this out because (a) and (c) appear to be 5 subwaves so breaks the 3-3-3-3 pattern.
Quick update,I'll spend more time Monday reviewing my plan so no trade at the moment.
It is possible we have a double bottom and might go up from here.
The other scenario I see, which has a clearer structure, is that we completed a very short X leg and are now down for another ABC wave structure which will terminate either at 8.8k (0.5) or 7.7k (between 0.618 and 0.786). That would be a good place for new long trade.