Making 5th downtrend wave; how deep does it go?
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We've built a large nbear flag in a nasty long 4th wave, and now retraced to wave 5 and broke down all supports until $8185. Now we're having what I think a subwave retracement. As you can see, all quakes are happening at the borders of the Fib circles of wave 4, and right now it is not an exception. In this point we also have converging the $8185 support, the bottom of the wave 1-2 downtrend channel and the last bottom uptrend line from April before the "big pump " (dotted green). All these act as supports and keep us in a subwave retracement here. But in my opinion the volume is not big enough to cut the 5th wave here and start a new bullish cycle.
We've built a larger and steeper downtrend channel at this point, and I think we are going down further and the next bullish retracement will be inside it.
The normal bear flag target is $7500, which I think would be at the limit of the Fib circles, and also on the green uptrend line of the lowest prices in April. If we get there (the most probable scenario) , we can have a normal bullish reversal.
But... we have the strong supports in the zone $7912-7962. In the case that wave 5 will be truncated there instead of having a normal subwave retracement, expect a rocket like bullish reversal, cause truncated 5th wave is a very bullish sign!
On the opposite, if we have subwave retracement there, it is also very probable that lots of longs stop losses be triggered, and in this case we can have extended 5th wave that could throw us to $7200 (normal count of subwave lengths) or even lower to $6800 to test the grey uptrend line of all bottoms.
Let's see which of these scenarios plays out.
We've built a larger and steeper downtrend channel at this point, and I think we are going down further and the next bullish retracement will be inside it.
The normal bear flag target is $7500, which I think would be at the limit of the Fib circles, and also on the green uptrend line of the lowest prices in April. If we get there (the most probable scenario) , we can have a normal bullish reversal.
But... we have the strong supports in the zone $7912-7962. In the case that wave 5 will be truncated there instead of having a normal subwave retracement, expect a rocket like bullish reversal, cause truncated 5th wave is a very bullish sign!
On the opposite, if we have subwave retracement there, it is also very probable that lots of longs stop losses be triggered, and in this case we can have extended 5th wave that could throw us to $7200 (normal count of subwave lengths) or even lower to $6800 to test the grey uptrend line of all bottoms.
Let's see which of these scenarios plays out.
Nota
A small bear flag breaking up! this is a price manipulation, but so far my wave 5 is not yet cut. Might be simply a bull trap, set to make some little fish go long and take their stop losses after. IMO the $8307 line is tested as resistance, together with wave 3 end. 0.786 and 0.61 Fib circle levels are hard to cross. But I am ready to turn bullish if we manage to get out the 2.618 and 3.618 circles without going lower, or from any of them above the horizontal diameter.Nota
Looking more deeply, we're fighting to break through the 0.5 Fib level of the bullish cycle (it's visible on the left of the chart). I think the bulls would want to take this as opportunity to transform the current bear cycle into a corrective one, and restart a new major bullish trend; they have been trying to do that since the beginning of the 4th wave, that's why the failed retracement from $8697. But IMHO they need more volume and general trust for that.If they don't succeed now, I expect them to try it again at the 0.618 level ($7964). There they will also have support from the old Fib level at $7962, and they might also find there the 3.618 circle and the bottom of the waves 1-2 downtrend channel; so they could have big chances to succeed!
Nota
Watch carefully! If we are going to touch the top of the wave 1-2 downtrend channel above $8350, we would have created a slanted H&S pattern, that could be the beginning of a bullish reversal. It now depends how long we are going to go sideways. Critical points: this circle (but unlikely) or the 3.618 one. Beyond that, very unlikely.Nota
We dropped down and exited the 2.618 circle; unlikely to return back in. If $8185 will fall as support, then wave 5 is back on track.Nota
Another bull trap; we aren't going to retrace here. The $8307 resistance and the Fib circle are holding tight. It's just another bear flag forming, keeping the same target at $7500. That also might suggest that there isn't going to be another subwave (it already looks like we've had 4); so probably we aren't going lower than $7500 before bullish reversal. But I'd keep an eye on that, just in case.Nota
Bitcoin has been nasty during the night in Europe! Crossed the $8307 resistance, tangled shortly the $8501 line, then the $8185, enormous shakeouts but with not a big volume. Some TA's were talking about an ascending triangle, but this morning we came back below $8301 and we're still in a bear flag which has become obvious on the 4h chart too. I'm trying to correlate this with what I see on BTCUSDLONGS (see chart). Now a lot of longs are closing, without any action on the price. I suppose they simply took their profits and now they're simply closing their margin tradings in expectance of futures expiration tomorrow that everyone is talking about. That might say something about the price direction they're expecting! So don't be surprised if new shakeouts will come until tomorrow.Nota
We've managed to get out of th 4.236 Fib circle. It looks we have to go down from here. Wave 5 should continue with the 5th subwave, but I think we'll stay in the less steep downtrend channel with it, such as the target remains $7400-7600. If we cross the bottom of the channel, big chances are to go to $7200 or even lower.
Nota
We're back in the circle, broke the $8185 resistance and headed to test the dotted green uptrend line; but for now with low volume. I don't think the bullish reversal is here, I suppose we'll go below the $8185 resistance again and then start the 5th subwave; but we might touch the top of the downtrend channel before. It just might take some time. Some longs have been built, but I don't quite trust the bulls yet.Nota
Signals are still conflicting. We've had a longer term bullish divergence on the RSI (lower price lows, higher RSI lows, green line) and a hidden bearish divergence recently (continuation pattern, lower price highs, higher RSI highs, red line). The long term bullish divergence led so far to two retracements. If it ends here, the hidden bearish divergence would have won. The hidden bearish divergence also appears on MACD and momentum. So far, appearently we retraced to subwave 5 at 0.618 Fib level of subwave 3; but patterns are however hard to see properly.IF we are going to reach the start of wave 3 (100% retracement) then we have bullish consolidation and wave 5 failure. Bulls are fighting hard, but they don't seem to have much volume.
IF the 5th subwave retracement confirms, wave 5 will complete.
Nota
Here is the chart screenshot for the above update:Nota
It looks like retracement failed and wave 5 is cut. We went above 0.786 of subwave 3 breaking the dotted green uptrend line, and the $8307 resistance. Now we are either trying to do a bullish consolidation, but with low volume, or building a range of which we are now near the top, and we'll decide the trend later. If $8307 confirms as support, I expect to go higher, but since the hidden bearish divergence increases, I don't think we can pass $8500, and we are going to start a new downtrend wave.Nota
Back, after having been caught up with a lot of things. So we've had an unexpected end of wave 5 followed by an unexpected rally which got stopped brutally at $8600 without finishing a 3rd subwave. This doesn't seem bullish anymore, it looks like a diagonal expansion pattern; bad sign if it happens after a bullish reversal. MACD had a bearish cross already, wave patterns are far from being clear; but we might just be finishing a larger B subwave from an even larger ABC correction of which wave A has already reached $7900. If it's true, we might go up to $8700 at most, then go down with wave C in 5 subwaves as low as $6600-6800!Of course, things are not quite clear; I will come with a new chart when I'll begin to see anything out of this fog. Just note a BIG hidden bearish divergence we have just built!
Nota
Just look at that hidden bearish divergence (following chart):Nota
forgot to menton: dotted blue
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