Retrospective analysis and what's about to come; some ideas
So, the bears won for now and we went down according to my bearish scenario; even I was surprised how well my 12345 impulse pattern fitted my initial drawing :)
Therefore I decided to look back and search for explanations. And I now say: WHAT IF the 5th major wave that would take us to $10500 or above it's not about to come, and we've just finished the 5th wave at $9800? The pattern that I am showing in this chart fits pretty well. Waves 1-4 are just as they should be. Since April 5-12 we were moving inside a large ascending channel (in grey). Confusion might have come with the strange subwave patterns of wave 5, so let's try to look a bit closer. What I can see in the 5th wave is a large 12345 diagonal wave pattern; hard to be noticed because wave 2 retraces almost to the base of wave 1, wave 3 is shortened by resistance levels and then wave 4 retraces pretty much inside the range of wave 1; but we're diagonal and it's allowed, according to my knowledge. Then, the same scenario repeats in the subwave 5 of wave 5, building a rising wedge out of a 12345 minor diagonal wave pattern expansion (see my previous post and the comments inside it).
But what do these diagonal expansions lead to? a truncated major 5th wave! And we went down, building a very steep and narrow descending channel (also in grey) and a first wave with a minor 12345 pattern.
BUT: so far, even if we moved out of the initial ascending grey channel, since a while we are still moving inside a large uptrend channel, only less steep (in cyan). The less bearish, or even slightly bullish scenario could be that we are building an ABCDE pattern ranging inside this channel and building a triangle of some kind.
What is the current situation? we crossed the support levels at $9300 and $9200, and the minor wave 5 touched the bottom of the cyan channel. We've also crossed the blue downtrend line of the recent maxima, and the green uptrend line, which is bearish. The truncated 5th major wave is also very bearish.
Therefore: IF we don't break the bottom of the cyan channel, I think we are going to range inside that channel until we have an opportunity for a bullish or bearish breakout; that would be not more than 5 waves in my opinion, but good opportunity for range trading.
Otherwise, we can only have two bearish scenarios;
One would be that we are finishing the A wave of an ABC major correction. In this case, we will retrace the wave B from outside the cyan channel, maybe hit its bottom or the $9300 resistance with the end of wave B, then retrace to $8200-8300 and start a bullish impulse wave from there.
The second would be a disaster, but less likely to happen looking at the multitude of uptrend lines. In that case, we would be finishing the first wave of a 12345 bear impulse (crash) that would push us to $6800 or below; that would create panic, maybe a V bottom, but for now I don't think it could go below the strong support at $6000, and then we should bounce again, but hard to say how much.
So, either range (the most probable) or bear, or crash (unlikely for now), but we must be prepared for anything. But I wouldn't wait for a 5th major bullish wave, I think it's done.
Therefore I decided to look back and search for explanations. And I now say: WHAT IF the 5th major wave that would take us to $10500 or above it's not about to come, and we've just finished the 5th wave at $9800? The pattern that I am showing in this chart fits pretty well. Waves 1-4 are just as they should be. Since April 5-12 we were moving inside a large ascending channel (in grey). Confusion might have come with the strange subwave patterns of wave 5, so let's try to look a bit closer. What I can see in the 5th wave is a large 12345 diagonal wave pattern; hard to be noticed because wave 2 retraces almost to the base of wave 1, wave 3 is shortened by resistance levels and then wave 4 retraces pretty much inside the range of wave 1; but we're diagonal and it's allowed, according to my knowledge. Then, the same scenario repeats in the subwave 5 of wave 5, building a rising wedge out of a 12345 minor diagonal wave pattern expansion (see my previous post and the comments inside it).
But what do these diagonal expansions lead to? a truncated major 5th wave! And we went down, building a very steep and narrow descending channel (also in grey) and a first wave with a minor 12345 pattern.
BUT: so far, even if we moved out of the initial ascending grey channel, since a while we are still moving inside a large uptrend channel, only less steep (in cyan). The less bearish, or even slightly bullish scenario could be that we are building an ABCDE pattern ranging inside this channel and building a triangle of some kind.
What is the current situation? we crossed the support levels at $9300 and $9200, and the minor wave 5 touched the bottom of the cyan channel. We've also crossed the blue downtrend line of the recent maxima, and the green uptrend line, which is bearish. The truncated 5th major wave is also very bearish.
Therefore: IF we don't break the bottom of the cyan channel, I think we are going to range inside that channel until we have an opportunity for a bullish or bearish breakout; that would be not more than 5 waves in my opinion, but good opportunity for range trading.
Otherwise, we can only have two bearish scenarios;
One would be that we are finishing the A wave of an ABC major correction. In this case, we will retrace the wave B from outside the cyan channel, maybe hit its bottom or the $9300 resistance with the end of wave B, then retrace to $8200-8300 and start a bullish impulse wave from there.
The second would be a disaster, but less likely to happen looking at the multitude of uptrend lines. In that case, we would be finishing the first wave of a 12345 bear impulse (crash) that would push us to $6800 or below; that would create panic, maybe a V bottom, but for now I don't think it could go below the strong support at $6000, and then we should bounce again, but hard to say how much.
So, either range (the most probable) or bear, or crash (unlikely for now), but we must be prepared for anything. But I wouldn't wait for a 5th major bullish wave, I think it's done.
Comment:
I would not exclude this subwave pattern. If true, the first bearish scenario is the most probable. However the bottom of the channel seems to hold for now.
Comment:
My sub-subwaves are playing like I said in the previous update! :) expect the wave A to finish at $8700-8800.
We are out of the cyan channel, broke all uptrend supports and have to test EMA 1200 which is near the $8700 support level now. Normal bears cannot penetrate such a wall, they need to retrace to take speed.
We are out of the cyan channel, broke all uptrend supports and have to test EMA 1200 which is near the $8700 support level now. Normal bears cannot penetrate such a wall, they need to retrace to take speed.
Comment:
I didn't have time to watch and update earlier, but I'm back. We've had a retracement; earlier than expected. Sub-subwave 5 failed at the $9098 support and the bulls took over - with very low volume! not yet convincing! - and came back inside the cyan uptrend channel, now having the green uptrend line as support. We managed to cross the resistance at $9215, but the $9300 level was too strong to cross. I think we are just building the second main wave, by going sideways for a while and resetting the RSI. For now, I don't think we are in a trend reversal, normally Elliott waves don't fail in the first wave; for such thing to happen, bulls should have had much more volume. So I still call $8700 or lower.
Comment:
Right now we just retraced to the third wave. If we get past the level of the end of the first wave, the immediate bearish scenarios are confirmed. Otherwise, we might be in a consolidation phase and build a new range. I hope to find time to come with a new chart soon.
Comment:
The update is here:
