BITCOIN - Impulsive, Corrective & What Happens Next
מעודכן
Well stock indexes did have a very hard bounce into the end of the week and BTC has had 0 reaction so far. And so its still a bit early to say but it looks like BTC is effectively decoupled, at least for a while.
And so is this bullish or bearish?
Well not moving with the uptrend of indexes that has previously invigorated BTC is certainly not bullish. At best it is neutral.
Anyhow BTC is now in another exotic correction unique to crypto.
I have numbered 6 previous corrective phases and coloured the trendlines - I'll go through each one. I'm going to compare them to Forex markets where various corrective phases most often stick to the rulebook in terms for subsequent outcome and using corrective analysis is probably most effective. The same can be true for stocks also to an extent, but FX seems to have more in the way of correction to work with.
For the trendlines;
GREEN = Agreeable with FX 😇
YELLOW = Hmmmmmmmmmmmmmmmm 🤔
RED = U wot m8? 😡
1 = GREEN: Although very convoluted with shakeout reversals (fakeouts) either side, this was a descending channel that a few chartists did spot and I wasn't on of them as I hadn't studied these patterns in detail, but in FX this is a very common pattern which will lead to impulse. It would appear that the very long correction was actually building pressure (cause) for an explosive upside breakout.
2 = RED: Contracting patterns can go either way, but with 2 enormous bearish momentum candles prior to the pattern it would be close to unthinkable in FX for this not to be a continuation pattern. In fact in FX I now look for contracting patterns like this (but with much narrower price bands) as a way to enter impulsive phase. But yet it was a reversal. And if we look at the fibs; it is a common 0.5 retracement which led to a further leg up. in this phase it was necessary to consider the increased volatility and elasticity with which BTC moves compared to FX and other markets to be able to see the potential for upside breakout.
3 = GREEN: Following the top there is a downward expanding pattern which is also common in FX. From the top the downward momentum pulls through the corrective phase thrusting with lower lows into another impulsive capitulation.
4 = YELLOW: This would be GREEN because it is a descending channel that leads to upward impulse, but because with upward impulse then leads to further capitulation I have labelled YELLOW. This can also happen in FX, but it yet again goes to show the elasticity of BTC and how we need other factors to confirm bias. It is not enough to trade off these patterns alone.
5 = RED: Ascending channel. "Aha" you think - "further collapse coming and you enter a short. Well not today buddy, this is what BTC does and plays by its own rules.
6 = RED: Same thing as 5 but inverted. Corrective descent does not often lead to capitulation in FX and other markets. And if you look at 1, 4 and 6 they are quite similar in being descending channels but have different outcomes. BTC is certainly a tricky little thing.
Ok so thats that. Now whats going on here and what happens next?
Well BTC looks like its falling into a descending channel with fairly tight price band so far. But as we have seen these channels can lead to different outcomes:
I think in either of these outcomes there is a good chance BTC gets to 20K in this move because it is only a slight overshoot from the 1:1 fib and will "repair" the area that can then provide solidity for an upside move. Long term bottoms do like to touch passed tops. And although I do think most likely BTC will go quite a bit lower, when the ducks line up I will be considering that it can also be the bottom. But I have some metric analysis to confirm that which I will go over in another thread.
See you at 20K.
Not advice.
And so is this bullish or bearish?
Well not moving with the uptrend of indexes that has previously invigorated BTC is certainly not bullish. At best it is neutral.
Anyhow BTC is now in another exotic correction unique to crypto.
I have numbered 6 previous corrective phases and coloured the trendlines - I'll go through each one. I'm going to compare them to Forex markets where various corrective phases most often stick to the rulebook in terms for subsequent outcome and using corrective analysis is probably most effective. The same can be true for stocks also to an extent, but FX seems to have more in the way of correction to work with.
For the trendlines;
GREEN = Agreeable with FX 😇
YELLOW = Hmmmmmmmmmmmmmmmm 🤔
RED = U wot m8? 😡
1 = GREEN: Although very convoluted with shakeout reversals (fakeouts) either side, this was a descending channel that a few chartists did spot and I wasn't on of them as I hadn't studied these patterns in detail, but in FX this is a very common pattern which will lead to impulse. It would appear that the very long correction was actually building pressure (cause) for an explosive upside breakout.
2 = RED: Contracting patterns can go either way, but with 2 enormous bearish momentum candles prior to the pattern it would be close to unthinkable in FX for this not to be a continuation pattern. In fact in FX I now look for contracting patterns like this (but with much narrower price bands) as a way to enter impulsive phase. But yet it was a reversal. And if we look at the fibs; it is a common 0.5 retracement which led to a further leg up. in this phase it was necessary to consider the increased volatility and elasticity with which BTC moves compared to FX and other markets to be able to see the potential for upside breakout.
3 = GREEN: Following the top there is a downward expanding pattern which is also common in FX. From the top the downward momentum pulls through the corrective phase thrusting with lower lows into another impulsive capitulation.
4 = YELLOW: This would be GREEN because it is a descending channel that leads to upward impulse, but because with upward impulse then leads to further capitulation I have labelled YELLOW. This can also happen in FX, but it yet again goes to show the elasticity of BTC and how we need other factors to confirm bias. It is not enough to trade off these patterns alone.
5 = RED: Ascending channel. "Aha" you think - "further collapse coming and you enter a short. Well not today buddy, this is what BTC does and plays by its own rules.
6 = RED: Same thing as 5 but inverted. Corrective descent does not often lead to capitulation in FX and other markets. And if you look at 1, 4 and 6 they are quite similar in being descending channels but have different outcomes. BTC is certainly a tricky little thing.
Ok so thats that. Now whats going on here and what happens next?
Well BTC looks like its falling into a descending channel with fairly tight price band so far. But as we have seen these channels can lead to different outcomes:
- If this becomes a very long descending channel then it may be building pressure for upside cause similar to 1 again. If it did this it could descend correctively to hit the 1:1 fib at 23K - at which point I would favour a strong bounce.
- Or if could be similar to 6 and simply lead to further capitulation.
- Or this could be a shorter corrective passage similar to 4 and would see an upside break with a further capitulation to follow. This is what i think is most likely and also there is the January low acting as resistance that would be an attractive landmark for an upside shakeout reversal pattern (fakeout). In addition it would provide symmetry to conclude a WXY as I have drawn in previous threads. I have drawn this scenario on the chart with copy from highlighted area.
I think in either of these outcomes there is a good chance BTC gets to 20K in this move because it is only a slight overshoot from the 1:1 fib and will "repair" the area that can then provide solidity for an upside move. Long term bottoms do like to touch passed tops. And although I do think most likely BTC will go quite a bit lower, when the ducks line up I will be considering that it can also be the bottom. But I have some metric analysis to confirm that which I will go over in another thread.
See you at 20K.
Not advice.
הערה
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Btw have you noticed how many now think BTC moves up simply because stock indexes are bouncing? 😄הערה
We're into the post FED interest rate cut blow off phase for risk on markets🥳.
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I have many great deep value opportunities ❕
Many Trade Ideas Every Day 📈
Regular videos ✨.
Telegram Group: $50 per month 👍🏻.
Contact: t.me/dRends35
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