Note: this is an expanded version of my analysis on TradingView.
Price has been moving in an upward channel since March 8, 2017 (cyan trendlines). We’ve seen two cycles of impulses (white waves) followed by ABC triangle corrections (red waves within magenta trendlines), and are currently in the second of these corrections. We’ll be using the Bittrex feed on a log-scale daily chart to compare the first impulse-correction cycle to the Fibonacci (Fib) retrace of the second impulse-correction cycle, and using a second Fib retrace to project a price pathway for a third impulse. If you’re in a rush, there’s a TL;DR section below with the most important takeaways.
Observations:
First Cycle
First Impulse
The channel kicked off with an initial impulse, with waves 1 through 4 falling below the 0.768 level of the first Fib retrace, and wave 5 falling in the 0.768 – 0.618 region.
First Correction
The first correction started on June 6, with the top of the triangle starting around impulse wave 5 and the bottom starting between impulse waves 3 and 4. The corrective waves all fell below the 0.768 level, with the C wave briefly piercing the bottom of the triangle on November 10, preceding the next impulse starting November 12.
Second Cycle
Second Impulse
Waves 1 and 2 of the second impulse began trapped in the first corrective triangle, breaking out on wave 3, which landed at the 0.5 level of the first Fib retrace, while wave 4 landed at the 0.768 level. Waves 1 through 4 of the second impulse fell below the 0.768 level of the second Fib retrace, while wave 5 fell in the 0.768 – 0.618 region. Wave 5 was repelled by the top of the channel on January 3, 2018, bouncing off the 0 level of the first Fib retrace.
Beginning of Second Correction
The present correction started with the top of the triangle around wave 5 of the second impulse and the bottom between waves 3 and 4, while waves A, B, and C fell below the 0.768 level.
Conclusions:
Projected Price Pathway
Looking at the similarities between these two cycles, it appears that they are fractal in nature, and that the near future will continue to look like the near past. The current projection shows that it will take approximately the same amount of time to complete the cycle we’re in right now as it did the last, and provides approximate timeframes for a third impulse back up to the top of the channel.
End of Second Correction
We’re presently working on the B wave of the second correction. The current projection shows that wave C will pierce the bottom of the triangle around April 27, and that price will rebound from the bottom of the channel around May 13, but continue to be trapped in the triangle until around May 17 – 18.
Third Impulse
The current projection also shows that impulse waves 3, 4, and 5 will respectively touch the 0.5, 0.768, and 0 levels of the second Fib retrace, with wave 5 again touching the top of the channel.
TL;DR
Observations
- Waves 1 through 4 of both impulses fell below the 0.768 levels of their respective Fib retrace
- Waves 5 fell in the 0.768 – 0.618 region
- Waves 5 were repelled by the top of the channel
- Both corrections started with the top of the triangle around wave 5 of the prior impulse and the bottom between waves 3 and 4
- Waves A, B, and C all fell below the 0.768 level
Projections
- The C wave of the current correction will pierce the bottom of the triangle around April 27
- Price will rebound from the bottom of the channel around May 13
- Price will continue to be trapped in the triangle until around May 17 – 18
- Waves 3, 4, and 5 of a third impulse will respectively touch the 0.5, 0.768, and 0 levels of the second Fib retrace around June 1, June 29, and August 20 – 21
- Wave 5 will touch the top of the channel again around August 20 – 21
Confirmation
- The MACD is currently in good form. We could see the histogram briefly turn negative, so long as it stays in the wedge (white trendlines), which could correspond to the move below resistance at the end of wave C, but we’d like to see a bullish divergence in the form of continued upward movement from the trend lines as confirmation and a quick recovery.
- The Stochastic RSI is currently heading further into overbought territory, so a downturn could be impending, confirming the the C wave down.
Please keep in mind that these are only approximate projections based on historical patterns, that what’s past is prologue, and that these forecasts will hold true until they don’t, at which point they will evolve with market conditions.
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