Correction continues to 8K, too heavy for bounces anymore
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We've been on this road since the ATH, but the exact route we would take on the way has been cause for much debate. We had one bull trap at 17.2K, but everything since has been heavy. Even my own forecasts for a momentary sunny trip to the topside of the pitchfork (before more winter) have fallen flat as we just keep slumping to the bottom with greater velocity. There's been no fuel for the bulls, despite decent Weiss grades, S.K. government action turning positive, and new optimistic futures contracts. Instead the market responds swiftly to FUD, whether it's hacked exchanges or speculation on the looming specter of Tether insolvency. So, the math is simple: lame rallies + strong dumps = more down, not much upside.
For weeks we've heard various targets for the "bottom" of this correction, some magical place where the pullback from the peak would finally reverse and the bulls would get their mojo back. I aimed for 8K on my previous charts, and as the correction goes on, that target has come into sharper focus. I'm now expecting the next leg to take us to $7,900 (on Bitstamp) where there is a notable convergence of important overlapping TA features:
These all converge in a couple days (Feb 6-7), and we just kissed the 0.618 fib on this last drop to $9,350 (Bitstamp is serious about its fib touches). We need a recharge to fill up the bids again over a few days, so we should see a slow crawl up to the congestion zone around $11,200 again -- then the order books will be ready for heavy dumps taking us on another steep drop -- or we could just tumble down from here, trapped under the old bear line we were so excited about breaking above just recently :P
After hitting the fabled "8K" that everyone's been chanting about, we should see a solid bounce back up to the 100MA, the 11,150 S/R zone, and enjoy more sideways ranging from 10K-11,5K underneath that 50% fib, until finally the folks who went long on futures contracts start goading the bulls into launching us out the top of this correction channel. Looking for a top on that 3rd wave around 15-16K. Might be setting up for another bull trap and slow slump just like how the 2014 bubble bear market started...
For weeks we've heard various targets for the "bottom" of this correction, some magical place where the pullback from the peak would finally reverse and the bulls would get their mojo back. I aimed for 8K on my previous charts, and as the correction goes on, that target has come into sharper focus. I'm now expecting the next leg to take us to $7,900 (on Bitstamp) where there is a notable convergence of important overlapping TA features:
- The bottom of this correction pitchfork channel, which I've now slightly adjusted (compared to my old one) to fit the actual precise wick bottoms of the selloffs on Bitstamp. Previously I had locked the top to the 17.2K peak to set the angle, and the last selloff to 9.2K I had assumed was an overshoot. Now I can see it that the bottom wicks were quite accurate, and I should ignore the top wicks above 17K, as it internally validates many more data points now.
- The support/resistance line at $7,900 that was defined back in November, on the way up the rally slope.
- The 0.705 OTE retrace of the entire rally from $2,972 to $19,700 lands *right on* that same S/R level. Too perfect. Like spooky perfect. Seriously.
- The rising 200MA, which should provide some support after we dropped off the 100MA when we couldn't hold the 50% retrace fib.
- The white trend line connecting the May 25th peak to the Nov 12th bottom (which prophetically touched the not-yet-existing 0.845 level, funny how that works...)
These all converge in a couple days (Feb 6-7), and we just kissed the 0.618 fib on this last drop to $9,350 (Bitstamp is serious about its fib touches). We need a recharge to fill up the bids again over a few days, so we should see a slow crawl up to the congestion zone around $11,200 again -- then the order books will be ready for heavy dumps taking us on another steep drop -- or we could just tumble down from here, trapped under the old bear line we were so excited about breaking above just recently :P
After hitting the fabled "8K" that everyone's been chanting about, we should see a solid bounce back up to the 100MA, the 11,150 S/R zone, and enjoy more sideways ranging from 10K-11,5K underneath that 50% fib, until finally the folks who went long on futures contracts start goading the bulls into launching us out the top of this correction channel. Looking for a top on that 3rd wave around 15-16K. Might be setting up for another bull trap and slow slump just like how the 2014 bubble bear market started...
Nota
Closeup of the correction pitchfork, as seen in my "Rinse, Wash, Repeat" chart Nota
I don't usually give dates, but this convergence zone clearly has a time associated, so I knew we were looking at Feb 6th, and figured there would be some FUD news coming out just before that would set off the selling -- and here we go, looks like US Senate hearings on that day :P coindesk.com/sec-cftc-chiefs-set-senate-crypto-hearing-next-week/Trade chiuso: obiettivo raggiunto
Orders at 7900 got filled a little early ;) Nota
There are plenty of bears calling for deeper dumps. Because hey, if we broke 8K, who not 7? 6? 5? Of course anything is possible, there are no absolutes -- but it's quite helpful to look at the current sentiment of the bears on Bitfinex, in terms of total open Long vs. Short positions. Once we hit 7900, the number of open shorts plummeted. We had a huge spike in shorts anticipating when we fell off the 50% fib at 11,000. But if we were really about to fall off the cliff *from right here* -- you'd see it. Nota
There are other indications that this is the relative "bottom" of this selloff (not forever, just local to this move). Look at the 4H RSI levels for the panic dumps on Dec 22nd and Jan 17th -- we are at the exact same level and have started back up. Even if you don't believe we're going to moon from here, and you think we have to get to 6K before this entire correction is over and the bull market continues -- we have weeks of climbing and recharging the RSI before we should be plummeting to that level again. 
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