Some of you maybe remember my attempts to learn the Trading Chaos of Bill Williams. Last time I made the mistake using this technique. But I decided don’t give up with learning this method. Today I am going to introduce the analysis which confirms all my previous ideas.
On the BTCUSD chart we can find the clear 1-2-3-4-5 Elliott waves cycle. I think that now the end of wave 5, the A-B-C correction is going to play out to the upside. Why? First of all the price now is in target zone = 0.68 Fibonacci extension. It is approximately at $21k. Earlier using the BTCUSDT chart the target zone was at $24k and I was surprised to see the Bitcoin below it that much. If you remember after the LUNA -UST crash there was also the small dump on USDT. That’s why the wave 3 on the BTCUSD and BTCUSDT charts are different. The second evidence is the 3 squat bars at the potential wave 5 bottom. It is the very strong sign of the trend end. The third thing we need to pay attention is the divergence between waves 3 and 5. To be honest I am still not an expert of Trading Chaos, but the most useful thing which I learned is why the divergences actually work. That’s why they usually appears at the wave 5 end – the trend end.
Look at volume of last 3 bars! They are huge and almost equal for every bar, but last to bars have small bodies. It means that buyers stopped this downtrend, the bullish hammer is about to appear also today. Let’s see!
For the most confidence that the downtrend is finished we also need the fractal which will be formed if the daily lows tomorrow and after tomorrow will be higher than today’s low. I am holding my long and waiting for the A-B-C correction between the new downside impulse.