Out of the uptrend chnnel; four possible scenarios from now on
Wave B has ended and we retraced brutally at 0.382 Fib level, with a volume unseen since May the 3rd. We've already exited from the large cyan uptrend channel and we're now testing the blue recent maxima downtrend line together with the $9098 support line. However the zone $8900-9000 proved to be a pretty strong support, so wave C might stop there. Therefore I see four possibilities from now on.
If we continue down below the $8900 bounce zone of wave A, the most probable scenario is to end the wave C somewhere in the region $8200-8500 and bounce from there with an impulse wave. However, even if unlikely, a second scenario is still possible, where the ABC pattern (orange) extends to 12345 targeting the strong support at $6000 (but many strong supports are still in the way), so if we ride the bounce from wave C we should put a clever stop loss.
If we stop above $8900, we'll be forced to build a range and consolidate with an ABCDE pattern (thin red line), maybe drawing a triangle. At the end of the consolidation pattern, a breakout should happen with an impulse wave, either bearish or bullish (arrows); because we would be out of the uptrend channel, after consolidation I would opt 60% for the bearish scenario; but a bullish impulse will certainly happen after the end of any of the 3 bearish scenarios. Hard to call a target for the bullish scenarios, we have to see the first retracement.
If we continue down below the $8900 bounce zone of wave A, the most probable scenario is to end the wave C somewhere in the region $8200-8500 and bounce from there with an impulse wave. However, even if unlikely, a second scenario is still possible, where the ABC pattern (orange) extends to 12345 targeting the strong support at $6000 (but many strong supports are still in the way), so if we ride the bounce from wave C we should put a clever stop loss.
If we stop above $8900, we'll be forced to build a range and consolidate with an ABCDE pattern (thin red line), maybe drawing a triangle. At the end of the consolidation pattern, a breakout should happen with an impulse wave, either bearish or bullish (arrows); because we would be out of the uptrend channel, after consolidation I would opt 60% for the bearish scenario; but a bullish impulse will certainly happen after the end of any of the 3 bearish scenarios. Hard to call a target for the bullish scenarios, we have to see the first retracement.
Comment:
So far the orange scenario (that I thought most probable) got validated. In this moment most supports are broken and we are tapping on the EMA 1200; if we go through, and below the support line at $9697, then we would create a larger and steeper downtrend channel; odds would be very bearish in short term
Comment:
We went down through the EMA 1200 and we are now in the $8600's . RSI is oversold, but while wave A subwaves retracements were very visible, there is no clear subwave retracement in wave C until now. So I might speculate that this is only the first subwave of wave C retracing now. I might expect then to go lower; with such a long third wave we might expect that this is actually a 12345 impulse pattern. If we don't climb back through $8700 and we are forming a bear flag pattern, it really might be the case. Strong probability to go below $8000; maybe retrace in the region $7912-$8000 where we have strong support. So far the H&S pattern that has just confirmed will push us at least to $8200
Comment:
After tracing the Fib level of the initial 1345 uptrend impulse pattern, I am coming with a more precise target.
If we really are in a corrective ABC pattern, we should restart uptrend at minimum Fib level 0.5 (approx $8361) or 0.618 ($7964).
If we would go lower than $7366 (Fib level 0.786) the news would be rather bad, because it would mean a bearish reversal, even crash pattern, that level being below the bottom uptrend line started from the bullish reversal at $6600.
If we really are in a corrective ABC pattern, we should restart uptrend at minimum Fib level 0.5 (approx $8361) or 0.618 ($7964).
If we would go lower than $7366 (Fib level 0.786) the news would be rather bad, because it would mean a bearish reversal, even crash pattern, that level being below the bottom uptrend line started from the bullish reversal at $6600.
Comment:
Interesting day! We've tried to go below the $8307 with two wicks, then the bulls pushed and tried a retracement at 0.5 Fib level; but they got rejected hard at $8501 after trying the EMA 1200 another time with a single wick, and now we're back to the support region at $8307-8361. We are probably building a rectangle pattern between the mentioned resistance and support, which makes hard to predict in which direction we're going. But note that the MACD didn't really have a bullish crosover, it's only tangling now. We've had and still have hidden bearish divergence on the momentum, which is a continuation pattern, and the volume wasn't big enough for a healthy bullish retracement. Therefore this should be either a subwave retracement for a longer wave C (so far, it's as big as the retracements of the subwaves in wave A), or if it gets longer, we're actually in the wave 4 of a 12345 pattern.
So in my opinion, we're going further down. And take care, if it's only a minor retracement and wave C gets much longer, it might be actually a wave 3!!!
In the case we are in wave 4, the target would be somewhere at $7400-7500; if it's a wave 3, it would be much lower, probably testing the uptrend support at $6800 if not worse.
Hard to set a target if ABC scenario is still valid, maybe $7366 (0.786 Fib level).
So in my opinion, we're going further down. And take care, if it's only a minor retracement and wave C gets much longer, it might be actually a wave 3!!!
In the case we are in wave 4, the target would be somewhere at $7400-7500; if it's a wave 3, it would be much lower, probably testing the uptrend support at $6800 if not worse.
Hard to set a target if ABC scenario is still valid, maybe $7366 (0.786 Fib level).
Comment:
We have mixed signals now. On one side, MACD finally had a bullish cross, but now we have a short term hidden bearish divergence on the RSI too. MACD signal isn't bullish yet. And we are printing a large bear flag or pennant. Bulls really have to fight hard if they want to win.
Comment:
The update is here:
If we shall cross it, we'll have to confront the EMA 1200 which is now at $8700 and should act like strong support.
A shortened wave C at this point would be a bullish consolidation, therefore a good opportunity to go long, I think. But wave C would want to be longer, so let's just see if the supports hold.