Buyers, be careful! Bears might be showing up soon!

BITSTAMP:BTCUSD   Bitcoin / U.S. Dollar
Primary count
As BTC approaches the psychological barrier of 10 000 dollars, it saw resistance at an important Fibonacci level of 0.618 measured from the high 11750 to the low of 6430. The proposed primary count also has its wave 1 equal to wave 5 which is a common ratio when there is extended wave 3. There is also decline in buying power as we are approaching the top of the impulse from 6450. All of these together with a daily RSI divergence increase the odds of completed 5 wave structure and the start of a pullback.

Secondary count
However, the bulls haven't lost hope completely yet as long as we stay above the bottom of wave 4. The alternative count is that we have just completed sub-wave 1 and 2 of the higher degree wave 5. Assuming we pass the previous high of 9950, then the most likely target is coming from a confluence of two ratios. The negative -0.236 from wave 3 and the wave 5 to wave 1 relationship of 1.618. This would bring us to around 11600 as a secondary target.

Today's takeaway:
The most common ratios of wave 5 to wave 1 when we have extended wave 3 (i.e. wave 3 is bigger than 1.618 times wave 1) are:
A) Wave 5 = Wave 1 (current primary count)
B) Wave 5 = 1.618 times Wave 1 (current secondary count)
C) Wave 5 = 2.618 times Wave 1

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Good luck and healthy gains!
CR Capital team


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