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Last week, I noted: “We only have seen completed impulses in smaller degrees. It is still possible to see failures here and go deeper into longer term supports… For Bitcoin, $7550 should not break until there is a completed impulse above $8000.”
I did not think that this was a likely outcome, but that is the name of the game in trading. Thankfully I was able to have an early warning ($7550 broken) and get out of my short term positions before the majority of the downside.
It’s always important, but especially now, to keep the bigger picture in mind. Long term support is at $3000. Until that level is decisively broken, I don’t expect a drawn-out correction a la 2014. As I’ve said before, the “ideal” target of this wave 4 correction is at $4800.
Zooming into the 12hr charts, I see two main possibilities, one bullish and one bearish.
The bullish is the triangle that I’ve shown for the past two weeks. The invalidation point for this is any break below the April lows ($6400).
Below $6400 and I will have to adopt the bearish count, where we are in the middle of the final leg down in this larger correction. The invalidation point for this will be above the wave i ($7060). But even if this particular count is invalidated, there are still a few more bearish alternatives. Just as before, to confirm a bottom, I need to see an impulsive structure to above ~$8000.
Once again, Bitcoin is the weakling out of most of the cryptos I am tracking. Many look like Ethereum and have room for another low without invalidating the 1-2 setup off of the April lows.
To me, the move off the April lows is distinctly impulsive, which means that it is highly likely that those lows are not broken. Because of this, I have to give the edge to the bullish triangle in Bitcoin. A serious market decoupling would need to happen for us to see $4700 Bitcoin and alts holding above recent lows.
As for the strategy in the upcoming week, I am still holding onto my long term positions. Like I said above, I was stopped out of all of my shorter term longs. I will be looking for any viable swing trade setups on either the long or short side.
Specifically, on the long side, I want to see a divergent bottom followed by an impulsive move and hold of support. And on the short side, I want to see a break below $6400 and then a corrective retrace no higher than $6900.
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Happy trading!
Charlie You
Altcoin Mentors, Inc.
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