We are probably going down making a 5th wave
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In this moment we are building a bear pennant; this could be the 4th wave of a 12345 pattern, rather than a bullish reversal after a ABC correction. If it's true, then we are going to test the recent bottom uptrend line (green) as support, and probably bounce at 0.786 Fib level (about $7400). Everything is targeting there: the green trendline, the $7362 support line, the pennant target and the 5th wave standard length. We've reset the RSI so it's very probable right now.
Please disregard the mispositionment of support lines labels, there are so many that they can't fit the y-axis scale; you have to count the lines by the color to identify them.
Furthermore, there can be a discussion. If we are retracing at $7400, we might have a consolidation of some sort, by building a triangle or a wedge, in order to take a trend decision; that, we shall see.
But, such a fall down might create a lot of FOMO and supports at $7400 might fall, such as the $7200 zone. In such a desperate case, we are going to test the grey uptrend line of all bottoms (around $6800) or even fall through it on the absolute floor at $6000. I don't think we can go lower; such a high negative momentum would make us bounce from the double bottom and revert to bullish trend with V bottom and a large impulse wave.
Of course, this is just an idea; let's see if one of these scenarios will happen.
Please disregard the mispositionment of support lines labels, there are so many that they can't fit the y-axis scale; you have to count the lines by the color to identify them.
Furthermore, there can be a discussion. If we are retracing at $7400, we might have a consolidation of some sort, by building a triangle or a wedge, in order to take a trend decision; that, we shall see.
But, such a fall down might create a lot of FOMO and supports at $7400 might fall, such as the $7200 zone. In such a desperate case, we are going to test the grey uptrend line of all bottoms (around $6800) or even fall through it on the absolute floor at $6000. I don't think we can go lower; such a high negative momentum would make us bounce from the double bottom and revert to bullish trend with V bottom and a large impulse wave.
Of course, this is just an idea; let's see if one of these scenarios will happen.
Note
We might have to test the black resistance line at ~$8700, where we also have the EMA 1200, before retracing down. Yet, I think the volume is not high enough to pass through, so my bear scenarios still stand up.Note
BTW, the bear pennant just became a bear flag for now; a more reliable pattern than the pennant. Let's see what happens, I don't see any clear divergence that would suggest anything.Note
The fourth wave retraced at the EMA 1200 (~$8750) and we are now in the 5th wave; therefore my initial scenario holds well. The target should stay unchanged in the $7200-7400 area.If the supports hold until there, especially in the $7900-8000 region, and the 5th wave gets truncated, expect a very bullish reversal. Yet, we'll have to vanquish the double top at $10000 to become fully bullish again.
We also might be in the case of a flat, bearish or bullish consolidation after an ABC pattern and not in a 5th wave; there is a large probability for that too. In this case, we'll have an attenuated triangle wave (ABCDE) and we are only going to know the trend after the triangle is built.
An opposite scenario is also possible (although I doubt it), that we have a longer 5th wave that ends below $7200. In such a case, I would expect an ABC correction followed by another impulse fall to around $5100; but that would be very unlikely due to plenty of supports and uptrend lines that we have until there.
Note
Bulls are trying to prevent wave 5 to start. Whales liquidated a lot of shorts, and pumped the price up, but we've hit again the strong resistance zone at $8700 even if the shorts liquidation target was $8900 as seen on @whalecalls on twitter. We might however break it, or come back and build a rectangle pattern, cause we couldn't go below the $8300 support.Note
The $8697 resistance is broken, but the EMA 1200 at about $8765 not yet; I wouldn't buy until it confirms as support. Bulls didn't come with a high enough volume to be convincing for now.Note
We continue to have mixed signals. On one side, there is a 7 days old hidden bearish divergence on the 2h chart: RSI making higher highs, while the price makes lower highs; this should ask for a more accelerated downtrend. On the other side, we have a recent bullish divergence on the momentum. MACD had a bullish cross since a while, and now got in the bullish (positive) zone.Also, the EMA1200 confirmed as resistance so far, and the top of the grey downtrend channel which is in this moment equal to EMA50 has not been touched.
But the $8697 level did not confirm as support yet, to validate the bullish claims of the MACD and momentum. Note however that RSI divergences are usually stronger than momentum divergences, and sometimes also than MACD.
A few minutes ago I had a look at some Fibonacci circles traced from the beginning of the recent downtrend. The last big moves happened at the bounds of these circles, and there are about 6h left until we reach the last circle. IF we reach that circle below the horizontal diameter (which is at about $8790), there is a large probability to go bearish again, according to the hidden divergence.
But I am not sure that the started waves pattern will continue after it was perturbed by the last whale moves.
Note
Because the market is very undecided and what I've called wave 4 is becoming longer than expected (so it might be wrongly assigned), I am looking at the Fib circles. We are just out of the wave 3 Fib circles near the horizontal diameter, so the trend is rather unstable. But if we touch the next circle of the "wave 4" Fib circles near the EMA1200 (short yellow line) we should be propelled to $8300 on the same circle. See the image here:Note
It looks like $8697 level has confirmed as support. However the EMA 1200 and blue downtrend line (eq EMA 50) are still acting as high resistance lines.BTW, now I've just noticed that I was looking at EMA's on a 4h chart and here I've started the idea on a 2h chart; so should actually read EMA 2400 and EMA 100 in all of the above updates; sorry for confusion but the indicator lines are not persistent because I've not yet decided to pay for pro status and I've decided to keep the 3 indicators at the bottom of the chart, and can't display more.
Note
So we broke down the $8697 support after a hard fight, and confirmed it as resistance, like the EMA 2400 and EMA 100 too. On the 4h chart it happened at the limit of the Fibonacci blue circle, as I was expecting. Now we are fighting with the $8501 support which tries to become resistance right now, after exiting the uptrend blue channel that I've traced just above the previous update. A bearish MACD cross happened on the 2h chart and is about to happen on the 4h chart, and some stop losses have already been triggered below the $8501 level.
I think we are going down, and technically the 12345 pattern is still valid, cause wave 4, even if extended, didn't enter wave 1 territory. For now we'll have to test the $8300 support too.
Note
Whales never cease to surprise me! They managed to pump again above the resistance/support after killing some longs! should we expect to go up again? I don't think so. But who knows? Patterns are distorting again, I think whales are expecting some big moves.Note
Wow! we're doing the 5th wave right now! We've broken all supports down to $8185 which is now at the bottom of the downtrend channel, and now we're testing it as a resistance, meaning we have to go at least 2 times lower! $7200 is waiting! Let's see how deep the rabbit hole goes!Note
The update is here!Note
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