BTC to backtest 1D EMA200 in 6100 to 6500 range
In my previous idea from December I called the bottom within a couple hundred dollars:
However I no longer think that we can make it into the 11k range on this wave. I can't see any other way to make the Elliot Wave count other than what is shown here, with wave 5 completion. Whilst we could get an extension, I think we are due for a significant retrace and consolidation before moving higher. In particular we need to backtest the 1D EMA200 as support to confirm the start of a new bull run. I think that we're now in the first leg of an ABC correction, and the logical place to reach down to the 1D EMA200 is around the 0.5 fib retrace of the whole bull impulse since December - that means around 6150 - 6100 for the next low - depending how long the ABC takes. If it takes longer we could see the reversal at more like 6550 or even closer to 6800 - but I would much rather see the ABC complete relatively quickly, hit that EMA200 and get moving again. In this case we'd be looking at something in the 12k - 15k range by Oct/Nov, so there is easily a 100% profit opportunity within a few months. There is also the possibility for a much longer phase of consolidation taking even until the end of this year before moving up again, but I don't think it changes the buy zones by much, only the amount of patience required.
Once we have a "B" wave confirmed (we still need to bottom out the "A" so it will take a while) then we just wait to get new lows below the A bottom then start laddering in, from around 6800 down to 6100. There is also the possible case to consider of dropping all the way into the golden pocket to 5200. I would start to get concerned if we spend any more than 2 days below the EMA200 in order to achieve that. We have the EMA200 in a solid uptrend now and have spent some significant time a good distance above it, so in order to confirm bull trend we need to see a solid impulse off of it.
An interesting comparison can be made with the movement off the bottom in Jan 2015 (end of prior bear market):
Here we can see:
1) A long wave 1-2 structure off the bottom with 0.786 retrace - same as in our chart this year.
2) A very short (in time) wave 4 - same as in our chart this year.
3) A 0.5 retrace on the whole move which finds strong support off the EMA200 - dipping below it for less than a day. This is what I would now like to see in this year's chart.
Note that after that first backtest the price stays above a rising 1D EMA200 continuously until the ATH at 20k:
with one further retest and 3 further dips close to the EMA200 - i.e. a well supported bull market. This is why the backtest is so important. If we get it then I think we're set for the next bull run to $100k and have a confirmed risk-managed place to buy. For the wider context about that see my idea:
It is notable that if you had bought 2 days after the 1D EMA200 backtest low in Aug 2016 (2 days needed to confirm it as a low on 1D chart), and then held, you would have made profits of up to 35x from the bull run to $20k. This time we might be going for only 16x but to me that would still be a very worthwhile investment over 2-3 years!
However I no longer think that we can make it into the 11k range on this wave. I can't see any other way to make the Elliot Wave count other than what is shown here, with wave 5 completion. Whilst we could get an extension, I think we are due for a significant retrace and consolidation before moving higher. In particular we need to backtest the 1D EMA200 as support to confirm the start of a new bull run. I think that we're now in the first leg of an ABC correction, and the logical place to reach down to the 1D EMA200 is around the 0.5 fib retrace of the whole bull impulse since December - that means around 6150 - 6100 for the next low - depending how long the ABC takes. If it takes longer we could see the reversal at more like 6550 or even closer to 6800 - but I would much rather see the ABC complete relatively quickly, hit that EMA200 and get moving again. In this case we'd be looking at something in the 12k - 15k range by Oct/Nov, so there is easily a 100% profit opportunity within a few months. There is also the possibility for a much longer phase of consolidation taking even until the end of this year before moving up again, but I don't think it changes the buy zones by much, only the amount of patience required.
Once we have a "B" wave confirmed (we still need to bottom out the "A" so it will take a while) then we just wait to get new lows below the A bottom then start laddering in, from around 6800 down to 6100. There is also the possible case to consider of dropping all the way into the golden pocket to 5200. I would start to get concerned if we spend any more than 2 days below the EMA200 in order to achieve that. We have the EMA200 in a solid uptrend now and have spent some significant time a good distance above it, so in order to confirm bull trend we need to see a solid impulse off of it.
An interesting comparison can be made with the movement off the bottom in Jan 2015 (end of prior bear market):
Here we can see:
1) A long wave 1-2 structure off the bottom with 0.786 retrace - same as in our chart this year.
2) A very short (in time) wave 4 - same as in our chart this year.
3) A 0.5 retrace on the whole move which finds strong support off the EMA200 - dipping below it for less than a day. This is what I would now like to see in this year's chart.
Note that after that first backtest the price stays above a rising 1D EMA200 continuously until the ATH at 20k:
It is notable that if you had bought 2 days after the 1D EMA200 backtest low in Aug 2016 (2 days needed to confirm it as a low on 1D chart), and then held, you would have made profits of up to 35x from the bull run to $20k. This time we might be going for only 16x but to me that would still be a very worthwhile investment over 2-3 years!
Comment:
I see us taking another drop here - we have an ascending wedge with bearish divergence on the 1H. It's uncertain whether this is the "B" wave completing or subwave 4 of the "A", but we can hope for the former as it means completing the ABC quicker. I think the targets are still roughly the same and still hoping for that 1D EMA200 backtest. In particular it would be great for the symmetry if this occurs at the 1.5 parallel from the original pitchfork.
Comment:
Looking at the 1H, I find it really noticeable how this 1.5 parallel from the original pitchfork provided both support and resistance across this move at the top. The 1.5 was also a prior support level in April, so if we go through the pitchfork with this next drop we can look for support both at the base of the pitchfork and at the 1.5. It's further notable that the 1D EMA200 is below the base of the pitchfork and will stay below it as we go down - so if we're going to test the EMA200 we have to go below the pitchfork, hence lets look for the 1.5 as well.
