It’s the first week of March, let’s take a look at the Bitcoin chart to see what price action we might expect in the near term.
Let’s start Big Picture on the Weekly Time Frame. Taking the Primary trend from the December 2018 low to the recent Nov 2021 high, we can clearly see a 5 wave structure which meets the Elliott Wave definition of an Impulsive move. Note here that while Wave labelling on the price action alone can be somewhat subjective, the MACD 4C allows a much crisper visual wave definition. Of particular importance here is, using the MACD, we see a convergence between waves 1 & 3, indicating trend continuation likely, while divergence appears between waves 3 & 5, suggesting a change in market behaviour to come.
Supporting evidence is provided in the volume signature. We see Supply entering at the top of the structure, with diminishing demand. In sum, this makes a compelling argument for the nearing of the end of the larger movement, which is further confirmed as the price falls below the supply line. At this point, we can start to expect a reversal or a consolidation into a trading range. Note here that volume can be interpreted either in traditional columns or in wave form, which displays accumulative volume, thanks to David Weiss's Weiss Wave.
“Buying waves are followed by selling waves in a seesaw battle until one side gains the upper hand”. David H. Weis
Chart#1:
Once the price has broken down through the supply line, we can apply a Fibonacci retracement tool, based on the entire Impulsive move-up, to provide target levels we can expect to see during the retracement. Note here of interest how the price behaves at each level, often testing, retesting, and ultimately using either as support or resistance.
Looking at chart #2, we see the price has successfully retraced all of the key levels, right down to the 0.78. At this point, we see a change in behaviour, as the price breaks the trend line and consolidates. Further, on the Daily TimeFrame, we now have what I see as a 5 wave corrective structure. (Note; this can also conform to Elliot Wave’s 3-wave ABC correction, with an extended C wave for those who strictly adhere to Eliot Wave Principles). Of significance here is that we see a divergence between Waves Y & Z. In addition, ultra-high volume signatures are entering the market, indicating possible strong demand emerging.
Chart#2:
At this point, we can start to expect a more significant retrace of the corrective move. By inverting the Fib Retracement and applying it to the corrective move, our first initial target is 0.236, which is in the 28000 regions for BTC. In further support of this target, we have still to see a significant retest of the Low that Created the High of the prior Impulsive move, which would be Wave 4 (see Chart#3).
Ideally, for the continuation of the Trend, we would like to see this final Low breached by a sharp Impulsive move on high volume, with a retest and consolidation, turning this level into solid resistance before a continuation. In our Chart#3, Wave Y fulfils the criteria of a sharp impulsive move down, yet has still to significantly retest this area. A retest of Wave 4 Lows would be in the 29400 price region for BTC. So we have a strong case for further upside, but are we out of the woods yet? Let’s look closer on the Daily & 4 Hr.
Chart#3:
On Chart#4 we see Supply entering and price getting rejected at the high of Wave X. Until this price level is broken, we can’t confirm a change in structure. Within Wave Z we have an internal high, which preceded the ultimate low of 15473. This level has been breached, subsequenlty retested, allowing us to retest the broken trend line. Is there an argument for a further retest of this level? Certainly. To support this, we can apply the Volume Profile fixed range tool to the entire corrective move. We see here that the high volume at price level (Point of Control POC) or the highest level of liquidity is at the 20700 area. We know that price likes to move from one high liquidity zone to another, so there is a strong case for a return to this region. Of comfort to the Bulls is that price so far has remained above this level, indicating that the volume that entered the market was on balance mostly demand, as prices subsequently rose.
Chart#4:
Let’s now go to the 4hr to further inspect the most recent price action. We see here (Chart#5), we have divergence, and price has broken the trend line indicating we have a possible a change in behaviour (either a consolidation or reversal). We have retraced to the 0.236 fib, but this is yet to be retested to act as short-term resistance. We have seen a sharp, impulsive move down to be followed by choppy sideways action. This would suggest the down move is yet to be completed, and a further sharp wick down to the high liquidity 20600 - 21600 region is likely. Let's go further into the 1hr.,
Chart#5:
Zooming right in, looking at the corrective move from the recent 25300 highs, the argument for continued downside seems solid. We have yet to see divergence on the smaller time frames. We have yet to see a retest of either the recent high volume bar or the larger liquidity pool in the 20600 - 21600 region. On the other side, as mentioned, we have yet to see the 29000 region tested. At this point my bias would lean towards a sharp push down in price to the high liquidity zone, followed by an impulsive move up, trapping shorts, and a grind up to 29000.
If you enjoyed this analysis or would like me to analyse any of your crypto coins please contact me.
Thanks, Tom.
Let’s start Big Picture on the Weekly Time Frame. Taking the Primary trend from the December 2018 low to the recent Nov 2021 high, we can clearly see a 5 wave structure which meets the Elliott Wave definition of an Impulsive move. Note here that while Wave labelling on the price action alone can be somewhat subjective, the MACD 4C allows a much crisper visual wave definition. Of particular importance here is, using the MACD, we see a convergence between waves 1 & 3, indicating trend continuation likely, while divergence appears between waves 3 & 5, suggesting a change in market behaviour to come.
Supporting evidence is provided in the volume signature. We see Supply entering at the top of the structure, with diminishing demand. In sum, this makes a compelling argument for the nearing of the end of the larger movement, which is further confirmed as the price falls below the supply line. At this point, we can start to expect a reversal or a consolidation into a trading range. Note here that volume can be interpreted either in traditional columns or in wave form, which displays accumulative volume, thanks to David Weiss's Weiss Wave.
“Buying waves are followed by selling waves in a seesaw battle until one side gains the upper hand”. David H. Weis
Chart#1:
Once the price has broken down through the supply line, we can apply a Fibonacci retracement tool, based on the entire Impulsive move-up, to provide target levels we can expect to see during the retracement. Note here of interest how the price behaves at each level, often testing, retesting, and ultimately using either as support or resistance.
Looking at chart #2, we see the price has successfully retraced all of the key levels, right down to the 0.78. At this point, we see a change in behaviour, as the price breaks the trend line and consolidates. Further, on the Daily TimeFrame, we now have what I see as a 5 wave corrective structure. (Note; this can also conform to Elliot Wave’s 3-wave ABC correction, with an extended C wave for those who strictly adhere to Eliot Wave Principles). Of significance here is that we see a divergence between Waves Y & Z. In addition, ultra-high volume signatures are entering the market, indicating possible strong demand emerging.
Chart#2:
At this point, we can start to expect a more significant retrace of the corrective move. By inverting the Fib Retracement and applying it to the corrective move, our first initial target is 0.236, which is in the 28000 regions for BTC. In further support of this target, we have still to see a significant retest of the Low that Created the High of the prior Impulsive move, which would be Wave 4 (see Chart#3).
Ideally, for the continuation of the Trend, we would like to see this final Low breached by a sharp Impulsive move on high volume, with a retest and consolidation, turning this level into solid resistance before a continuation. In our Chart#3, Wave Y fulfils the criteria of a sharp impulsive move down, yet has still to significantly retest this area. A retest of Wave 4 Lows would be in the 29400 price region for BTC. So we have a strong case for further upside, but are we out of the woods yet? Let’s look closer on the Daily & 4 Hr.
Chart#3:
On Chart#4 we see Supply entering and price getting rejected at the high of Wave X. Until this price level is broken, we can’t confirm a change in structure. Within Wave Z we have an internal high, which preceded the ultimate low of 15473. This level has been breached, subsequenlty retested, allowing us to retest the broken trend line. Is there an argument for a further retest of this level? Certainly. To support this, we can apply the Volume Profile fixed range tool to the entire corrective move. We see here that the high volume at price level (Point of Control POC) or the highest level of liquidity is at the 20700 area. We know that price likes to move from one high liquidity zone to another, so there is a strong case for a return to this region. Of comfort to the Bulls is that price so far has remained above this level, indicating that the volume that entered the market was on balance mostly demand, as prices subsequently rose.
Chart#4:
Let’s now go to the 4hr to further inspect the most recent price action. We see here (Chart#5), we have divergence, and price has broken the trend line indicating we have a possible a change in behaviour (either a consolidation or reversal). We have retraced to the 0.236 fib, but this is yet to be retested to act as short-term resistance. We have seen a sharp, impulsive move down to be followed by choppy sideways action. This would suggest the down move is yet to be completed, and a further sharp wick down to the high liquidity 20600 - 21600 region is likely. Let's go further into the 1hr.,
Chart#5:
Zooming right in, looking at the corrective move from the recent 25300 highs, the argument for continued downside seems solid. We have yet to see divergence on the smaller time frames. We have yet to see a retest of either the recent high volume bar or the larger liquidity pool in the 20600 - 21600 region. On the other side, as mentioned, we have yet to see the 29000 region tested. At this point my bias would lean towards a sharp push down in price to the high liquidity zone, followed by an impulsive move up, trapping shorts, and a grind up to 29000.
If you enjoyed this analysis or would like me to analyse any of your crypto coins please contact me.
Thanks, Tom.