As we postulated in our last discussion, Bitcoin was due for another wave down, and indeed has begun on that path since. We typically look at the daily chart here, since this column only publishes once a day, but this time let’s look at the 8-hour chart:
The yellow highlighted area shows where the price turned exactly at the end of the 1st square, and the green highlights where market turned at the 3rd arc.
As I am typing, the recent fall found temporary support at the 2nd arc. The question is, will it hold? Or will price fall through it? Of course we can never know for sure, but we can make educated guesses. Let’s look at a bear setup from the high:
Before we look at the daily chart, I will tell you that my suspicion is that support will not hold and that we are going to see price go lower. Why do I say that?
Some of you may already see the answer, which I have highlighted in green. Price penetrated the arc pair fully (and did so again in the next-to-last candle). This suggests to me that the arc which is currently supporting the present candle is not very strong. It folded twice already. My guess is it will get tested again, and will fail again. So, the next target is the 2nd arc pair.
The end of a square is often a turning point, so if we guess that price might turn thereat the 2nd arc pair, we would get a low very close to the low highlighted in green. That would be VERY reasonable place, imho, to enter a long position, with a tight stop.
Elliot Wave traders will recognize that this would look very much like a (possibly) completed A-B-C correction.
Let’s take a look at the daily chart, which we looked at on Friday:
Will this support hold? It is clearly way too soon to say, although my hunch is that it will. Time will tell.
I am sure Elliott Wave traders can see the 5 wave structure of the last advance to the high. It’s a lovely thing to see when you are trying to gauge which way the market wants to go. In this case, imho, it wants to go up, but has to finish this correction first.
Remember: The author is a trader who is subject to all manner of error in judgement. Do your own research, and be prepared to take full responsibility for your own trades.
Last modified: March 4, 2021 4:52 PM