Okay, so I have been learning Elliot Wave Theory / Fibonacci etc for a few weeks now. (Although it has been hard to put it into practice since we have been in a 6 week bear market). But looking back on the first few impulse waves up, I noticed how over-extended the 5th wave was. This can be good and bad news!
Trading view publishing has never been my forte - I wish viewers could just click on my chart and be able to zoom in and edit it the same way I do. So if this gets published very messily due to the scaling of the chart, bear with me!
This is essentially what the chart reads:
Impulse wave 0 to 1: A beautiful wave up from $1737 to $5045 Nice Jump!
Correction wave 1 to 2: Retracement to $3000.81 - a 0.618 retracement (GOLDEN ZONE)
Impulse wave 2 to 3: $3000.81 to $7900 - Another healthy impulse wave
Correction wave 3 to 4: Retracement to $5462 (Almost perfectly hitting the 0.5 retracement level)
However - from waves 4 to 5, we saw an incredible and over extended rally. All the way to $19,891 at the peak! I originally had all the fib retracements to show the golden zones we hit on during the correction waves, but I decided to put just 2 Fib Extensions to show what healthy impulse waves look like.
As we can see from the chart, impulse wave 3 blew through the 1:1 extension (expected in bull markets) to a near 1.618 extension. That is healthy! Now after the correction wave 4 retracement, the next logical fib based extension would have wave 5 ending at $10422 for a 1:1 extension (normal for a wave 5), or at $13,451 for another 1.618 extension (more rare, but still possible in a bull market).
As we can see - We did not stop at a 1:1 extension, or the 1.618, or the 2.618, we hit nearly a 3x extension on wave 5. A state of euphoria, but incredibly unhealthy, and it might the reason why there is such a nasty correction going on.
Good and bad news!
The good news is, if we take a Fib Retracement tool from the beginning of the impulse waves to where wave 5 SHOULD have ended (at $13,451 at the max) we see that a healthy retracement from there would be around $6,100.
Bad news:
We may potentially retrace to $6,100 (or more since a 0.786 retracement is possible in a bear market, but less likely).
More bad news is that this only takes away confidence from the community. People are seeing this as Bitcoin losing 70% of its value. It hurts. Especially when we think that ATH's might never be reached again! In reality, however, an all time high of nearly $20,000 should not have been reached so soon. Perhaps $10,000-$12,000 would have been a good point to reach, but not 20k. If we had a nice, healthy correction from the 10-12k range, this would feel like nothing! It would hurt, of course, but that is normal after a 5 wave cycle. There is generally a 50 to 60% retracement after these, but now it just seems like a never ending bear market.
This is sort of an out of the box thought on why we are crashing so hard, so let me know what you think!
ALSO: This should most likely not be taken as a TA. There are many people smarter than me who could probably give better price predictions / call bottoms / call tops. I just wanted to provide some clarity and give the community back some hope! Remember the technology hasn't changed one bit!
Trading view publishing has never been my forte - I wish viewers could just click on my chart and be able to zoom in and edit it the same way I do. So if this gets published very messily due to the scaling of the chart, bear with me!
This is essentially what the chart reads:
Impulse wave 0 to 1: A beautiful wave up from $1737 to $5045 Nice Jump!
Correction wave 1 to 2: Retracement to $3000.81 - a 0.618 retracement (GOLDEN ZONE)
Impulse wave 2 to 3: $3000.81 to $7900 - Another healthy impulse wave
Correction wave 3 to 4: Retracement to $5462 (Almost perfectly hitting the 0.5 retracement level)
However - from waves 4 to 5, we saw an incredible and over extended rally. All the way to $19,891 at the peak! I originally had all the fib retracements to show the golden zones we hit on during the correction waves, but I decided to put just 2 Fib Extensions to show what healthy impulse waves look like.
As we can see from the chart, impulse wave 3 blew through the 1:1 extension (expected in bull markets) to a near 1.618 extension. That is healthy! Now after the correction wave 4 retracement, the next logical fib based extension would have wave 5 ending at $10422 for a 1:1 extension (normal for a wave 5), or at $13,451 for another 1.618 extension (more rare, but still possible in a bull market).
As we can see - We did not stop at a 1:1 extension, or the 1.618, or the 2.618, we hit nearly a 3x extension on wave 5. A state of euphoria, but incredibly unhealthy, and it might the reason why there is such a nasty correction going on.
Good and bad news!
The good news is, if we take a Fib Retracement tool from the beginning of the impulse waves to where wave 5 SHOULD have ended (at $13,451 at the max) we see that a healthy retracement from there would be around $6,100.
Bad news:
We may potentially retrace to $6,100 (or more since a 0.786 retracement is possible in a bear market, but less likely).
More bad news is that this only takes away confidence from the community. People are seeing this as Bitcoin losing 70% of its value. It hurts. Especially when we think that ATH's might never be reached again! In reality, however, an all time high of nearly $20,000 should not have been reached so soon. Perhaps $10,000-$12,000 would have been a good point to reach, but not 20k. If we had a nice, healthy correction from the 10-12k range, this would feel like nothing! It would hurt, of course, but that is normal after a 5 wave cycle. There is generally a 50 to 60% retracement after these, but now it just seems like a never ending bear market.
This is sort of an out of the box thought on why we are crashing so hard, so let me know what you think!
ALSO: This should most likely not be taken as a TA. There are many people smarter than me who could probably give better price predictions / call bottoms / call tops. I just wanted to provide some clarity and give the community back some hope! Remember the technology hasn't changed one bit!