Next impulse wave to start in cryptocurrencies?
After an 11 day drive higher, we saw a 3-day corrective move. It is entirely possible that today’s price action is the beginning to the next bullish impulse wave.
3rd Impulse Wave? Today’s candlestick shows a good chance.
Bitcoin has had a wild and big moving December. After coming off of the slaughter of November which saw Bitcoin drop from the swing high of 6540 on November 7th to the 2018 low of 3128.89 on December 15th (a -52.16% loss), Bitcoin has staged a possible recovery setup. From the December 15th low of 3128.89, Bitcoin rallied higher to 4239.37 on Christmas Eve (December 24th). That move represented a +35.49% gain. From December 24th, Bitcoin then moved down to 3567. The move lower from December 24th to December 27th constituted a 3-day down move after an 11-day up move. This is important because Gann listed series of 11’s as important swing date ranges. Additionally, Gann wrote that after a 7 to 11-day move higher, it was expected to see at least a 3-day move retracement – which is exactly what we see playing out on Bitcoin’s chart. What makes that 3 days move even more important is the price that it stopped at. The 3567-value area represents the 61.8% Fibonacci retracement level of 4239 and 3184 – a powerful reversal area.
Elliot Wave practitioners may consider today’s trade to be the end of a corrective wave and the beginning to the third bullish impulse wave of the current price action. The key price level to project form this level would be near the 5041-value area. What is very interesting about the day’s move has been the power behind that move. Trading volume is higher than yesterday (December 27th) as well as the trading range. Depending on what data a trader looks at, there is a bullish engulfing candlestick pattern on the daily chart, which is one of the strongest bullish candlestick patterns in Japanese candlestick analysis. Traders should also see that price action is forming what could be a right shoulder in an inverse head and shoulders pattern, with a neckline break above the prior swing high at 4239 is a key level to break above and then retest to move higher.
Traders should also observe that the end of a 192-day Law of Vibration cycle occurs on January 6th. The fact that the 2018 lows from the most significant bear move in Bitcoin’s history occur near this new Law of Vibration cycle and that it is near the beginning of the next 2019 trading year is a very powerful signal of a strong reversal of this bear trend. Volume wise, traders should observe inflows into he altcoin markets as a very bullish signal as it indicates traders are willing to leave the security of Bitcoin to speculate in the more risk-on instruments in the cryptocurrency market.
Also, I hope everyone had a wonderful Christmas break and a great time with friends, family or whoever you spent your holiday with. And let’s look forward to 2019 as a new year with new profits to be made!