I read summaries of Goldman Sachs last newsletter from early November and decided to visualize what they wrote about. From their perspective, we are in a consolidation period called Wave 4 before the 5th Wave and final wave up in this sequence. What happens after that is usually a considerable correction, which I assume is what happened in the 2014 retrace. I've read just enough about Wave Theory to be dangerous and this is my first post, so please do not invest with this, rather, just share your thoughts on my effort. Thanks.
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With the retrace that happened with Segwit2x fork cancellation though, it is hard to tell if the Wave 4 consolidation may be muted. Wave 4 consolidation usually occurs more mildly and in a meandering way, than some of the quick sharp moves we've seen.
I could see a drop to 6K and even 4.5K in the case of some bad news and even a drop to 3K if Bitfinex / Tether hits the fan, although a lot of new money would come rushing in rather quickly I at that point, we've hit a critical mass with the public awareness, especially with the millennial market and countries experiencing hyperinflation, that Bitcoin is developing a global reputation this year for being a solid, albeit volatile, store of value.
With all the new money in at high levels, a lot of people aren't going to want to sell, and with a lot of old money in really low, there's a huge base of strong hands / hodlers that's been building for a while, although I can see a lot of speculators and institutional money in the space who need to show strong 4th quarter profits might cash out before the holidays. Then they'll come running back in for 2018. ;)
Benjamix
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I am starting to think we just finished or still in a 5th and 8k might be unbreakable if we don't get the big volume to avoid the large 3fp that is unfolding this week. I too am new to trading and enjoy sharing with other beginners as we struggle to stay afloat in the waves.. Have you dabbled in Cypher? I'm looking for a good book on it.. I'm neck deep in patterns at the moment.
Also as a note I read wave 4 is generally the opposite to wave 2. if wave 2 is energetic wave 4 is flat and vice versa.. Cheers, and good luck taming the beast !
adthenad21
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@Benjamix, Thanks for your perspective. Good to you as well. Do you mind sharing more about your wave 5 hypothesis?
@Benjamix, I stated a while back in my very first post 8k might be the next real psychological limit, not 6 and it seems to have panned out that way because it is giving a lot more resistance than the 6k did.
adthenad21
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@Benjamix, Thanks for posting. This is a weird crypto world and I think it will get weirder if/when institutional gets involved. Thoughts on what happens from here? Does this wave theory change drastically if the big funds get involved?
Benjamix
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@adthenad21, Mate, I feel like I just stumbled on an obvious indicator with simple guidelines so I don't know if I will pursue wave theory and instead run with my own new pattern idea.. That is until I find someone else that has stumbled on it and written about it.. lol... But to answer your question I get the gist that institutional money will tame bitcoin somewhat. But! I don't think the side betting alt markets like bitmex, polo, bittrex etc etc will lose there volatility for some time.
As for the theory, it changes and adjusts with the market's flow, everything is just indicators with statistical weight based on how they performed in the past. Thanks for sharing too !!
CoreyCrypto
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Very interesting. Good stuff. Would you mind sharing the newsletter?
@adthenad21, That article was the basis for my chart. Simply replicated it and added some notes of my own. It was very educational to recreate their chart to help me understand and visualize wave theory.
With all the new money in at high levels, a lot of people aren't going to want to sell, and with a lot of old money in really low, there's a huge base of strong hands / hodlers that's been building for a while, although I can see a lot of speculators and institutional money in the space who need to show strong 4th quarter profits might cash out before the holidays. Then they'll come running back in for 2018. ;)