Hi there,
Let's take a look at BTCUSD with a simpler approach with an interest in discovering the price action at significant support and resistance areas by using the Elliot wave.
Wave 5 is subjectively Wave 3, and Wave 3 follows a bearish ABC pattern to form Wave 4.
We have (A), which is above 4, and (B), which is lower than 5, making a lower high.
Then the price came down to the support area above a support zone (a support zone takes into account pin-bars). Now we want to know what could happen to the current candle.
Possible outcomes:
1. The candle could potentially move up to B, undergo a minor pullback, breach 3, and progress upwards, presenting a bullish scenario.
]Bearish scenario :
2. The candle could potentially decrease and break through the support zone to establish a lower low (A) somewhere in the 58K area.
3. The price could break the 58K area and plummet to 51563.13.
4. Or, the price could drop and go all the way to 44889.56.
Given the prevalence of more bearish scenarios than bullish ones stemming from the monthly candle analysis, adopting a long position does not appear ideal. Similarly, going short is a high risk. Therefore, the whole setup is neutral.
* The best approach and prudent course of action would be to do nothing, exercise patience, and monitor how the price will react around the 52K or 48K levels while also observing the price action above the 72K threshold. A high-low formation above 72K could signal a potential yet subjective bullish continuation.
Approaching trades like this is best when you are trading part-time or as a hobby because you are aiming for a perfect price action setup, which is rare if you just look at candlesticks. You will be nervously juggling between a price-go-up or a price-go-down binary situation, fearing news that might disrupt your expected price movement. Using the Elliot wave as a means to assess support and resistance levels is a good approach, but it has limitations in terms of technical analysis. To improve an approach like this, it's best to incorporate moving averages. Understanding how prices react to moving avarages at specific levels can enhance your trading approach with this strategy.
Happy Trading,
Khiwe.
Let's take a look at BTCUSD with a simpler approach with an interest in discovering the price action at significant support and resistance areas by using the Elliot wave.
Wave 5 is subjectively Wave 3, and Wave 3 follows a bearish ABC pattern to form Wave 4.
We have (A), which is above 4, and (B), which is lower than 5, making a lower high.
Then the price came down to the support area above a support zone (a support zone takes into account pin-bars). Now we want to know what could happen to the current candle.
Possible outcomes:
1. The candle could potentially move up to B, undergo a minor pullback, breach 3, and progress upwards, presenting a bullish scenario.
]Bearish scenario :
2. The candle could potentially decrease and break through the support zone to establish a lower low (A) somewhere in the 58K area.
3. The price could break the 58K area and plummet to 51563.13.
4. Or, the price could drop and go all the way to 44889.56.
Given the prevalence of more bearish scenarios than bullish ones stemming from the monthly candle analysis, adopting a long position does not appear ideal. Similarly, going short is a high risk. Therefore, the whole setup is neutral.
* The best approach and prudent course of action would be to do nothing, exercise patience, and monitor how the price will react around the 52K or 48K levels while also observing the price action above the 72K threshold. A high-low formation above 72K could signal a potential yet subjective bullish continuation.
Approaching trades like this is best when you are trading part-time or as a hobby because you are aiming for a perfect price action setup, which is rare if you just look at candlesticks. You will be nervously juggling between a price-go-up or a price-go-down binary situation, fearing news that might disrupt your expected price movement. Using the Elliot wave as a means to assess support and resistance levels is a good approach, but it has limitations in terms of technical analysis. To improve an approach like this, it's best to incorporate moving averages. Understanding how prices react to moving avarages at specific levels can enhance your trading approach with this strategy.
Happy Trading,
Khiwe.
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