Since my last post, the bitcoin correction has continued to drag on, with a period of extensive consolidation that has patterned out the clearly visible descending triangle marked in orange in Chart 1. My preferred scenario remains the ending diagonal and, over the last month or so, we have edged tantalisingly close to a dénouement that could mark the end of the 2018 correction.
Ending diagonal recap
Chart 1 shows the long 2018 correction based on an ABC zigzag structure (the full idea is here). Let’s have a quick recap:
- An aggressive A wave that took us to the low around USD 5,900 at the start of February
- A corrective B wave to the distinctive double top formation around USD 11,500 at the start of March
- A long, stretched-out C wave based on an ending diagonal.
The C wave ending diagonal hypothesis is compelling insofar as it reflects the fact that the A wave went “too far, too fast” and is allowing price the time needed to connect with the cycle-level trendline marked in red on Chart 1. (If there is one line that matters on the bitcoin chart, this is it.)
So, what’s changed?
Nothing and everything. Nothing, because the ending diagonal hypothesis is still very valid. Everything because we now have the descending barrier triangle marked in grey on Chart 1, patterned out during a month of chop and consolidation. A descending barrier triangle, especially when it follows a strong downward move is an extremely strong indicator of further downside to come. In short, the triangle looks complete and bitcoin seems closer than ever to finding its landing zone on the red touchline.
Will the triangle break down? Will we touch the trendline? We should find out in the next few days.
Disclaimer: I am not a financial adviser. Nothing in this post should be taken as financial advice. All content is provided for information purposes only.
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