Trading corrections is always challenging because of the complexity of structures that are available for the analyst to select from. There's probably two broad views at the moment in terms of EW theory.
1) We have completed wave 3 up to 11.8k and are now the corrective wave 4. This invalidates if the wave 1 high of 9053 is breached.
2) We have completed the 5 waves and are now in a corrective structure which becomes more and more complex as the days go by.
The chart shows scenario (2) and my conviction is that we are in this structure and that we are completing a contracting triangle as part of the recent (b) leg to move into the (c) leg of the broader WXY structure.
Under this scenario there are three facets that lead me to think we will bounce at 8.2k and complete this Y (c) leg.
- 0.618 of the recent bull from 6k
- 1.618 extension from the W leg of this recent consolidation pattern
- Areas of support on the bear wave down and the recent 5 wave bull up
My plan
I have just sold off some of the coins I have purchased at 8.5k. The target for this is 8.2k and the stop will be very tight at 9860. Exceeding 9860 invalidates the current structure. The risk reward is high at a 10:1 ratio. However the probability of activating my stop loss is also high. This is a high risk, high reward trade. This fits MY trading plan and my overall short term conviction.
Sold at 9686
Target 8200
Stop loss 9860
R: 10
Probability: Los
Sizing: Small
1) We have completed wave 3 up to 11.8k and are now the corrective wave 4. This invalidates if the wave 1 high of 9053 is breached.
2) We have completed the 5 waves and are now in a corrective structure which becomes more and more complex as the days go by.
The chart shows scenario (2) and my conviction is that we are in this structure and that we are completing a contracting triangle as part of the recent (b) leg to move into the (c) leg of the broader WXY structure.
Under this scenario there are three facets that lead me to think we will bounce at 8.2k and complete this Y (c) leg.
- 0.618 of the recent bull from 6k
- 1.618 extension from the W leg of this recent consolidation pattern
- Areas of support on the bear wave down and the recent 5 wave bull up
My plan
I have just sold off some of the coins I have purchased at 8.5k. The target for this is 8.2k and the stop will be very tight at 9860. Exceeding 9860 invalidates the current structure. The risk reward is high at a 10:1 ratio. However the probability of activating my stop loss is also high. This is a high risk, high reward trade. This fits MY trading plan and my overall short term conviction.
Sold at 9686
Target 8200
Stop loss 9860
R: 10
Probability: Los
Sizing: Small
עסקה סגורה: הגיע לסטופ:
Structure invalidated, trade closed.
a) Into another X and then down, creating a triple zig zag
or
b) Into the next 5 wave impulse up