Its too early to tell, but BTC just dropped to the 50% retracement of yesterday's 5 wave impulse. There are a ton of shapes that set up like this, so this is a no trade at the moment....but I will be looking for confirmation of the structure and playing wave 3 if this proves to be the close of 2. Like I have said in the past, set up likely scenarios and update your best case as data comes in. Trade when risk/reward is acceptable to you and when you have appropriate confirmation.
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Another option could be a .618 retracement before the close of 2. That would brings us to roughly 8150.
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We did get the bounce off of our .618 extension of our macro wave 1. That means that our macro impulse wave theory is still intact. Right now we are in an sub impulse wave that just had the close of 4. Wave 5 is a fickle thing, but if wave 5 is a repeat of the length of 1, the 5th wave should reach 8400 before completing our sub-wave.
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Well, that worked. Loved the extended 5th. Hopefully everybody out there playing that sub-wave is also pleased :)
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Ok, back to the big picture here for a sec. Someone in the comments asked about my first target for the close of wave 3, so I figured I would put my thought up here as well. My target for wave 3 is roughly 8750. That being said, be aware that this could also be a big ABC correction off of the bearish impulse down. If that proves to be true, we could have just found the top.
Hopefully you are picking up that not being married to a count is very important. Do I think we are in a large bullish impulse up? That would be cool. But I still wouldn't bet my life on it because there are other options and other counts. I do not want to be surprised if for some reason it enters into a huge bearish correction here. Manage your risk and trade moments, not unconfirmed hopes.
Hopefully you are picking up that not being married to a count is very important. Do I think we are in a large bullish impulse up? That would be cool. But I still wouldn't bet my life on it because there are other options and other counts. I do not want to be surprised if for some reason it enters into a huge bearish correction here. Manage your risk and trade moments, not unconfirmed hopes.
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A couple thoughts on wave 5 for those who are interested. As I said prior, wave 5 can be a difficult beast for a lot of reasons. To calculate potential wave 5 extensions, your first move is to use your fib tool to set the height of wave 1 and stack it on the close of 4. The next option is to then take the height of the 1.618 of wave one and stack that onto the close of wave 4. The last option, doesn't occur as often, is to take the height of 2.618 of wave 1.
A good way to help narrow down the options, is understand that statistically speaking, Wave 5 typically ends between .618 and 1.00 of the height of 0-3 stacked on the close of 4.
I exited my position where I put the red arrow in this graph. It is a 1.618 extension of wave 1 stacked onto the close of 4. Am I currently missing out on the further extension of 5? Yes I am, and I don't care. Risk management and statistics are important to me and it was a target that I set and stuck to. There are lots of moments to make money in this game I didn't reenter when it continued up. You don't need to FOMO into a trade...they set up all the time with a far better risk/reward then re-entering into a 5th extension. If any of you are interested in having these wave rules so you can use them in your own TA, shoot me a PM and I'll send a link to PDF for ya.
A good way to help narrow down the options, is understand that statistically speaking, Wave 5 typically ends between .618 and 1.00 of the height of 0-3 stacked on the close of 4.
I exited my position where I put the red arrow in this graph. It is a 1.618 extension of wave 1 stacked onto the close of 4. Am I currently missing out on the further extension of 5? Yes I am, and I don't care. Risk management and statistics are important to me and it was a target that I set and stuck to. There are lots of moments to make money in this game I didn't reenter when it continued up. You don't need to FOMO into a trade...they set up all the time with a far better risk/reward then re-entering into a 5th extension. If any of you are interested in having these wave rules so you can use them in your own TA, shoot me a PM and I'll send a link to PDF for ya.
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Be careful here. Keep yours eyes open for a potential ABC correction wave here coming off of our close of wave 5. I am not sure where "C" will end but given the initial set-up of the structure combines with current RSI, this points towards a corrective movement. The market appears pretty amped about BTC at the moment, but its important not to fall into "it'll never stop going up" mentality.
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Well BTC has held its own today. I have my eyes open for a corrective pattern, but the market is not a big fan of corrections at the moment. Assuming BTC doesn't just keep climbing, I would look for a corrective pattern here. The chart below shows a possible impulse down, the other option could be simply turning waves 1,2,3 into an ABC and it climbs from there. We can wait for confirmation of any of these scenarios.
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Be aware that the way that candle just took off could mean we are dealing with a corrective ABC and then back up. Watch for the close of a wave and a .382 to a .50 retracement and a close for confirmation.
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The close of our sub-wave 5, which is the impulse in blue in this chart, ended at a perfect 2.618 ext of sub-wave 1 stacked onto the close of 4. We had an ABC correction followed by another ABC correction to potentially finish the larger macro 3rd wave. From there we came back down and are working on what could be the close of 4. There is a lot of resistance here, so anything can happen. The option that I am watching for is for BTC to make a run to close the 5th anywhere between 8750-8900.
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On the bearish side, there is also the possibility of a H&S pattern forming off of a series of corrective waves wave. H&S patterns are a reversal patter and typically send the price in the opposite direction of how the pattern was entered. As you can see it is really here to create a bullish scenario and a bearish one, without an obvious indicator which one will occur. For me this is a NO TRADE zone. I am going to wait for a confirming indicator before getting involved.
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BTC was hell bent on completing that pattern posted in my last update. Now that the pattern is complete, we are still pretty in the dark as to what structure BTC will enter next. Let's keep a close on it and see what direction things go now that the H&S pattern has semi satisfied.
In other news, BTC broke down on the 4-hour RSI support but was caught by the 1-day support line. Pretty big deciding moment right here.
In other news, BTC broke down on the 4-hour RSI support but was caught by the 1-day support line. Pretty big deciding moment right here.
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For anyone following our dialog and/or wanting updates please refer to a more macro chart I will be updating. Shout out to @Zigh72 for giving an alternate count that looks like could stick. Updates moving forward will be found here:
