Well less than 48 hours after we mentioned that sentiment had turned to Greed and we should close trades and batten down the hatches the pullback came. But since we knew this MIGHT happen, we were prepared financially and mentally to not panic into Fear Selling. Bottoms are found by those in "Fear of Losing" and Liars.
So where to next? In order to calm myself I went over the chart looking for levels of interest, patterns, and more importantly where we are in the cycle just to confirm. Now keep in mind there are several counts and we could be in the midst of a broader pullback. $11,000 would be a low end target as we had mentioned in the previous post BUT a breakdown of $10,000 would put $6,000 in play. Now lets calm some fears and go over some facts.
1) There has been a huge inflow of money into the space and many of this money has not cleared yet as evident by Coinbase and other exchanges having 2-3 day delays. 2) The previous extension from wave "i" double topped at the 3.618 ($2900) level in wave 3. We fell short of that level. 3) The previous corrections have been bought up quickly forming "V" patterns. Why bet against the prevailing trend pattern? 4) There is just way too much pessimism abound, on twitter, news channels etc. Bubbles happen when everyone is optimistic not pessimistic 5) John Mcafee posted he would eat his ----- if this lasted longer than 4 days
Ok who is arguing with John?
So where to now? It appears we hit the lower level of $11,000 that we posted 2 days ago. This is the exact reason we have to remove emotions from investing. What seemed in-probable 2 days ago happened this morning, but we understood this could happen so we did not panic sell. This is why we look for chart for guidance. If history repeats we should retest the previous high, however I think we hit closer to $22,500. Looking back at the previous (iii) wave we hit the 3.618 extension level. We fell short of that recently but only once have we not hit or exceeded the 1.618 extension. That extension is $35,281 so that would be a high end target. But this would complete wave 5 in our count and I believe the 0.786 level which is close to the 3.618 wave (iii) extension is the sweet spot. This is where I am taking some off the table looking for a longer term correction wave (IV) where I will look to buy for the preliminary target of 40k. Very Preliminary.
Keep in mind this is a long term chart to assist in guiding us in where we are based on Elliott Wave and sentiment indicators. EW is not a definite and 4 different analysts will provide 4 different counts, so this is my count and you should verify it with yours. Also keep in mind we can retest 11k and a breakdown would put $6000 in play as we could have completed wave (III).
I took the dip as an opportunity to buy BCH DASH and LTC. Yes LTC was just way too cheap to not scoop up and this is a longer term trade.
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This is what I am monitoring to see if we correct further or consolidate and continue higher.
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The left side is the current correction the right side is the correction at 4900
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I'm definitely not shorting here, but keep in mind we can pullback. As we have stated numerous times corrections are difficult and unless something reveals itself to the contrary until the trend and pattern differs I do not guess. I would rather look for a setup to trade then try and time a top or bottom. Right now we just have to be patient and not get an itchy finger either way. What is different this time is the whole alt market is rallying back as well. This would lead me to believe the market over all is still bullish and BTC may be a laggard but will follow the market trend. I have added the HMA"s that I use for the one hour chart and everything is bullish. Now this can turn on a dime and during corrections it does. This is why we monitor trends and patterns and look for anything to provide us an edge over the market one way or the other. Slight differences between the two corrections but overall they are similar enough in nature with the big difference being we are in a final mid cycle wave 5 and a short term wave 5 so it would not be uncommon to see a rally to an ATH, or a failed rally.
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levels of interest 14K 11k 8k. 6k since we pulled back from the trend line. Not that we pullback to 6k but it is a level in the super cycle.
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Update as we broke through the 14k level. Question is do we follow the same correction pattern that lead us to new highs in September or do we go lower from here and look to verify if we completed wave III above and are in wave IV. Keep in mine we thought we were in wave IV in September and we rallied higher. Regardless of how you feel you can not dismiss one for the other which is why we tighten it up and get to the sidelines taking profits off positions and batten down the hatches. Corrections are difficult and are seldom clear which is why we look at past corrections to help guide us, but these are guides only! Anything can happen!
However, I would like to come in from a different view. IMHO, BTC's rise from 1000 (start 2017) to 10,000 (Dec. 2017) was the "norm" . That significant rise in a short amount of time caught the ire of the "Establishment" (World Banks and Wall Street). BTC/Crytpos are intruding on their domain of currency and wealth creation. In addition, many clients were pulling money out of their traditional investment vehicles and strongly asking their investment managers to divert holdings into BTC/Cryptocurrencies. Of course, this raised a red flag and so a plan was put into motion to DESTROY or diminish the thought of investing in BTC/Cryptocurrencies in the minds and hearts of their wealthy clients as well as MAIN STREET. You can hear the echoes of this sentiment by some of their leaders in the media. DON'T GET INVOLVED WITH CRYPTOS - "A BUBBLE", "SCAM", "PONZI SCHEME","NO INTRINSIC VALUE" etc.
How NOT to achieve this? First, they don't have the main mechanism of (naked) short selling and destroying the value of a company (or in this case BTC/Cryptos) like they do in the stock market. This is why in the equity stock market the house always wins. Small investors cannot "borrow" large sums of shares they don't own and sell into the market to drive the price down, unlike the wall street establishment and big banks/investment houses. Secondly, due to Blockchain technology "borrowing" BTC/cryptocurrencies to short cannot happen on a public ledger that virtually everyone has access to, unlike the clearing houses that perform stock trade settlements (longs and shorts), hidden and out of sight for the majority of investors. shortdata.ca/big-players-little-stocks-and-naked-shorts/
How TO achieve this? Well, what we see this week and within the last month was their quick plan taking effect using the brute force method. They created 2 new futures/options trading vehicles , despite the false protest from the Establishment. They bought BTC/Cryptos in a very short time frame so these "investment" vehicles hold the underlying assets we're told. So, can you imagine 1000-10,000 in approx. 11 months, but in less than a few weeks 10,000 to nearly 20,000! Who has the means to do that for BTC and also across a broad spectrum of Cryptocurrencies? Look at all the large market caps at the highs! But, in a more impressive fashion crashing prices in a matter of days! Now, again who would have the means and why would they sacrifice billions in order to do this? One word, DOUBT. They were willing to pay a huge sum to instill doubt into the minds of their investors and also the general public. DON'T GET INVOLVED WITH CRYPTOS - "A BUBBLE", "SCAM", "PONZI SCHEME", etc. Will their plan work? Time will tell.
There is one saving grace, however, and that is they are trying to prop up their own devised "bubbles" - both the equity market and bond market. We hear all the daily, weekly, and quarterly highs from the media regarding these markets. But, they can't divert funds from one market in order to destroy another for an extended period of time. Thankfully, there is a limit to the amount of money they can be print out of thin air before they get called on it (if not already).
Is there something the Crypto community can do to hold back this onslaught? Absolutely, 1) DON'T SELL and importantly 2) BUY! The power of BTC (market leader) is its finite availability and scarcity that will drive up the price making it more difficult for the Establishment to reallocate resources to put out the fire. Not only is it critical to NOT SELL, but also to BUY, because if no one continues to buy in fear of price dropping then the Establishment can continue to SELL to each other driving the price down even further. SOMEONE needs to step in and stop the perpetual selling by the Establishment.
Many will view this as a NORMAL HEALTHY market correction. However, from what I have seen within a very short time frame things looks far from NORMAL or ORDERLY, but rather a strategic and spectacular way to instill DOUBT about Cryptocurrencies and divert everyone's attention back to the "NORM".
You changed my point of view and helped me to calm and buy more!
SuperMario4
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@BoWing, Evidence of traditional monetary manipulation mechanisms is pretty clear to see. The shakedown has begun. Keep your coins off exchanges if you are worried, don't sell, and trust in the blockchain.
Waynet461
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@BoWing, Well put,I have had similar thoughts about how they would try to manipulate the market,but those who HODL will always be in the game.
@BoWing, I was thinking the establishment would wake up and get scared and 'pump and smash'.
So we have establishment froth, and the people's floor. I would like to think the masses that are buying into cryptos for the long haul are boosting BTC's floor to $8000, maybe now to $11000. And if the establishment can take it from 11000 to 19500 and then smash it back to 11000, some people will get scared and sell and it will go to 10500, but we are only at 1-2% or so market penetration, so "the people's floor" will keep rising.
(And I don't know if BTC will end up as the best cryptocurrency, so I also look at 'the people's floor' for the entire crypto market cap.)
CryptKeeper54
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i know it's probably not your style and money may not be a driving force, but you would make a KILLING if you made an educational video series of your charts and analysis. People love videos. Great job as usual. Much respect.
@CryptKeeper54, Couldn't agree more... Definitely the most refreshing, comprehensive, grounding, and entertaining analyses you can find. Always rooted in the psychology of objective and responsible trading / investing. The community definitely appreciates your contributions @goldbug1!
However, I would like to come in from a different view. IMHO, BTC's rise from 1000 (start 2017) to 10,000 (Dec. 2017) was the "norm" . That significant rise in a short amount of time caught the ire of the "Establishment" (World Banks and Wall Street). BTC/Crytpos are intruding on their domain of currency and wealth creation. In addition, many clients were pulling money out of their traditional investment vehicles and strongly asking their investment managers to divert holdings into BTC/Cryptocurrencies. Of course, this raised a red flag and so a plan was put into motion to DESTROY or diminish the thought of investing in BTC/Cryptocurrencies in the minds and hearts of their wealthy clients as well as MAIN STREET. You can hear the echoes of this sentiment by some of their leaders in the media. DON'T GET INVOLVED WITH CRYPTOS - "A BUBBLE", "SCAM", "PONZI SCHEME","NO INTRINSIC VALUE" etc.
How NOT to achieve this? First, they don't have the main mechanism of (naked) short selling and destroying the value of a company (or in this case BTC/Cryptos) like they do in the stock market. This is why in the equity stock market the house always wins. Small investors cannot "borrow" large sums of shares they don't own and sell into the market to drive the price down, unlike the wall street establishment and big banks/investment houses. Secondly, due to Blockchain technology "borrowing" BTC/cryptocurrencies to short cannot happen on a public ledger that virtually everyone has access to, unlike the clearing houses that perform stock trade settlements (longs and shorts), hidden and out of sight for the majority of investors. shortdata.ca/big-players-little-stocks-and-naked-shorts/
How TO achieve this? Well, what we see this week and within the last month was their quick plan taking effect using the brute force method. They created 2 new futures/options trading vehicles , despite the false protest from the Establishment. They bought BTC/Cryptos in a very short time frame so these "investment" vehicles hold the underlying assets we're told. So, can you imagine 1000-10,000 in approx. 11 months, but in less than a few weeks 10,000 to nearly 20,000! Who has the means to do that for BTC and also across a broad spectrum of Cryptocurrencies? Look at all the large market caps at the highs! But, in a more impressive fashion crashing prices in a matter of days! Now, again who would have the means and why would they sacrifice billions in order to do this? One word, DOUBT. They were willing to pay a huge sum to instill doubt into the minds of their investors and also the general public. DON'T GET INVOLVED WITH CRYPTOS - "A BUBBLE", "SCAM", "PONZI SCHEME", etc. Will their plan work? Time will tell.
There is one saving grace, however, and that is they are trying to prop up their own devised "bubbles" - both the equity market and bond market. We hear all the daily, weekly, and quarterly highs from the media regarding these markets. But, they can't divert funds from one market in order to destroy another for an extended period of time. Thankfully, there is a limit to the amount of money they can be print out of thin air before they get called on it (if not already).
Is there something the Crypto community can do to hold back this onslaught? Absolutely, 1) DON'T SELL and importantly 2) BUY! The power of BTC (market leader) is its finite availability and scarcity that will drive up the price making it more difficult for the Establishment to reallocate resources to put out the fire. Not only is it critical to NOT SELL, but also to BUY, because if no one continues to buy in fear of price dropping then the Establishment can continue to SELL to each other driving the price down even further. SOMEONE needs to step in and stop the perpetual selling by the Establishment.
Many will view this as a NORMAL HEALTHY market correction. However, from what I have seen within a very short time frame things looks far from NORMAL or ORDERLY, but rather a strategic and spectacular way to instill DOUBT about Cryptocurrencies and divert everyone's attention back to the "NORM".