Weekly Opportunities In Cryptocurrency: Challenging The Bearish Case?

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Includes: BTC-USD, ETH-USD
by: Ryan Wilday
Summary

I expect a break of close in resistance as this article is submitted.

If true, we'll open the door to higher resistance where the bearish case must hold.

Alternative paths are a key discipline of Elliott wave analysis, to adjust one's trading plan according to market conditions.

Over the last week, we've had very little movement in the cryptocurrency market. The 'micro' corrective wave I posted in my last chart is still in progress and I am waiting for further downside movement. I'm trying to get used to life in the slow lane with the current state of this market.

Given the situation, I thought, with risk of getting into minutia, I'd expound further on the patterns I see in the market.

In last week's Weekly Opportunities in Cryptocurrency: Deadly Breakdown, I held $7200 bitcoin and $630 Ethereum as key levels for the bearish case to remain. I didn't write about the micro charts I was following, but posted 'resistance boxes' for bitcoin and Ethereum that topped at $6900 and $553.

You'd have had to zoom in on the charts to see those levels. Yet, these levels specifically note where resistance is for the clearest impulsive path lower for C waves in each coin. And, as of writing, those levels are currently under pressure. Before I hit the submit button on this article, they may be broken.

So, what is next?

While breaking these levels does not directly challenge the bearish case, it does muddy the waters a bit. And, potentially, it can begin the process of opening a larger rally. For the latter to happen, though the market has work to do.

While I didn't share these charts in this article, I've held alternative 'red counts' on my hard drive for this potential. A key discipline in Elliott Wave analysis is to prepare yourself with alternative views when your count is invalidated, especially when you see other potentials.

The critic says "Given all the alternative counts, Elliott Wave can't predict anything." To that, I say "I don't use Elliott Wave to predict anything." Instead, I use Elliott Wave to discover potential paths the market can take, for there are not limitless potentials as some would believe. Elliott Wave leads the analyst to see these paths, and where key pivots lie.

And, tonight as we speak, in my short-term trading account I flipped from building my short position for the ride down to 'scalping' long as we began pushing on resistance. If those levels do break it should provide a little 'ride' up into higher resistance: $7200 BTC and $630 ETH that I mentioned last week. And, I'll prepare to re-strike short for southward movement as we bump up to those levels.

With respect to charts this week, I wanted to share those 'red counts' I held back last week, and also potential paths if those resistance levels break. I've overlaid the white and red counts to compare.

For bitcoin, I would expect a higher break of $6900 would bring on $7385 in a higher wave 4, for an ending diagonal. On further work on this alternative tonight, I'll even give room to $8275. Above that level, I have no immediate downside setups evident. I would propose then that we'll see a larger B wave rally in bitcoin, and the great correction of 2018 would extend further in time. But I'll offer that chart when and if we cross that level.

BTCUSD Source: Motivewave

For Ethereum, my red count sees a larger wave ii up to $659, though due to price action in this zone, it should hold $630 where there is significant supply. This red count is a larger impulse that can take Ether down to the $186 region. Above $659, like bitcoin, will have me without an immediate bearish alternative. And, above $659 a B wave rally is also likely in Ethereum.

ETHUSD Source: Motivewave

Conclusion

In response to the question posed in my title, the answer is no, not yet. But at the risk of jumping the gun a bit, I believe we're about to break lower resistance. And, while I was putting my money where my mouth was last week, in placing short positions in this key pivot, I am now cautious about immediate downside, and looking up a bit further. Also, on further work, I'm giving a bit more room to the downside thesis - now $8275 in bitcoin, and $659 in Ethereum. But above those levels, I'll have to consider the recent break of bullish support as a big fake out and a larger rally will be likely.

Disclosure: I am/we are long BTC-USD, ETH-USD. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.