Trend change. First 5 wave up completed. Correction in progress.
Short term pattern shown (4HR). Check out my other posts for long term Elliott wave counts. They are alive and well.
Back to the short term. We are watching a potential trend change in play. The pattern from lows in mid .40's is clearly impulsive and in five waves up toward .94. We now appear to be correcting that five wave impulse. There are a variety of patterns that corrections can take in Elliott wave analysis. I am showing the most common for a wave 2 correction... a simple zig-zag. It doesn't have to be a zig zag, there are many other patterns for corrections. The important thing to watch for is that the pattern stays corrective, not impulsive.
I am also showing a purple zone which is the most common area where wave 2 corrective patterns end (within the range of the previous wave 4). Using Elliott wave, this gives us a range of near .62 - .70 as possible ending point of the correction (starting point of wave 3 up). Interestingly, this area overlaps very well with the fib retracement area of 50% - 61.8% (.64 - .696). Wave 2's can retrace all the way down to .456 without invalidating the count, but the area mentioned above is the most likely area for the correction to complete.
Many traders use a second corrective wave after a first impulsive wave to place low risk orders in the areas I have described above. It is considered "low risk" because we have a clear 5 wave impulse indicating the primary direction of the trend (up), and a clear point where the market proves our trading hypothesis wrong (below .456).
Also note, from a classic TA perspective, a correction here could allow the formation of the "handle" of a cup and handle formation. This would be another strong nudge in the bullish camp if it did materialize.
Many times in trading, there are times to be patient and do nothing, and then there are points where the patterns start align based on your chosen method to place low risk/high reward trades. We are nearing this latter stage using Elliott wave and classic TA.
Do your own analysis. Choose your own methods. Don't trade more than you are willing to lose. Have fun! Crypto is a once in a lifetime opportunity.
Back to the short term. We are watching a potential trend change in play. The pattern from lows in mid .40's is clearly impulsive and in five waves up toward .94. We now appear to be correcting that five wave impulse. There are a variety of patterns that corrections can take in Elliott wave analysis. I am showing the most common for a wave 2 correction... a simple zig-zag. It doesn't have to be a zig zag, there are many other patterns for corrections. The important thing to watch for is that the pattern stays corrective, not impulsive.
I am also showing a purple zone which is the most common area where wave 2 corrective patterns end (within the range of the previous wave 4). Using Elliott wave, this gives us a range of near .62 - .70 as possible ending point of the correction (starting point of wave 3 up). Interestingly, this area overlaps very well with the fib retracement area of 50% - 61.8% (.64 - .696). Wave 2's can retrace all the way down to .456 without invalidating the count, but the area mentioned above is the most likely area for the correction to complete.
Many traders use a second corrective wave after a first impulsive wave to place low risk orders in the areas I have described above. It is considered "low risk" because we have a clear 5 wave impulse indicating the primary direction of the trend (up), and a clear point where the market proves our trading hypothesis wrong (below .456).
Also note, from a classic TA perspective, a correction here could allow the formation of the "handle" of a cup and handle formation. This would be another strong nudge in the bullish camp if it did materialize.
Many times in trading, there are times to be patient and do nothing, and then there are points where the patterns start align based on your chosen method to place low risk/high reward trades. We are nearing this latter stage using Elliott wave and classic TA.
Do your own analysis. Choose your own methods. Don't trade more than you are willing to lose. Have fun! Crypto is a once in a lifetime opportunity.
Comment:
XRP printed out a nominal new high, but internal momentum/volume did not confirm the high and it had a dramatic reversal yesterday. The new high doesn't change the analysis. We are likely in a wave 2 correction. Support range still .62 - .70.
Comment:
Price action is adhering to the Elliott wave pattern very well. We have just begun wave C of II.