Summary…
The expected counter trend rally is unfolded. We expect this is only a “B” Wave of an “ABC” counter trend correction (our preferred count at the time of this writing). The alternate count would be that wave B will not develop into a larger structure and is already complete (confirmed by a break of 16,310). That said we still consider 17,915 (50% price retracement of the selloff and the top of the Cloud as a reasonable counter trend target.
Detailed technical highlights and potential Elliott Wave count…
No sooner than when we laid our turkey stuffed body out on to the couch yesterday did the expected oversold countertrend rally in Bitcoin began to unfold. The first hint that it was beginning was a higher low in the Fisher Transform that failed to violate its signal line (yellow circle). The second was MACD confirming the move in the Fisher by crossing its signal line (green arrow). Over the course of eight hours the first leg of the counter rally reached the confluence of Fibonacci retracement resistance at 17,550 (circle “a” of a lesser degree in green). That pivot high gave birth to our newly drawn Schiff Pitchfork (P1 through P3 in violet). Prices pulled back in circle wave “b” of a lesser degree avoiding two touches of the Median Line (violet dotted line) of the newly drawn Pitchfork. Upside momentum has begun to slow and the Upper Parallel of the Pitchfork has thus far capped a further advance but the constant “knocking on the door” of that resistance suggests that that short term hurdle may be overcome targeting a 50% retracement of the selloff and the top of the Cloud at 17,915. This technical thesis will be negated and the counter trend rally will be considered to have met its terminus if the P2 low at 16,310 is violated bringing forward the alternate B wave the preferred Elliott Wave count.
For those who would like to learn more about the history, construction and analysis of Median Line Analysis, A.K.A. Andrews’ Pitchfork, utilizing Optuma Charting Software written by myself and my colleague Kyle Crystal can click on the links to the three part series…
https://www.optuma.com/pitchforks-part-1/