The rejection on the third touch of the descending diagonal trendline couldn’t have been clearer, which means there must be something important about that line. In my last post, I floated the idea of a descending wedge pattern defined by price action since late February to present. This post uses this pattern to present an ABC count for the 2018 correction, based on the contracting ending diagonal shown in Chart 1.
At primary degree of trend (this is wave IV of cycle degree), the chart shows a violent impulse wave down from last year’s all-time high of 19.6k. This was followed by an ABC zigzag retracement to 11.8k (a close-up of the B wave is shown below in Chart 2).
From here, price begins a contracting ending diagonal defined by the wedge formation identified in my previous post. Ending diagonals usually occur at the end of larger patterns and show exhaustion of the larger movement. Could this finally be the light at the end of the tunnel?
This count seems a plausible response to the diagonal trendline connecting the tops around 11.8k, 10k and 8.5k. In this scenario, and if the third wave (minor degree, or grey in the charts) is complete, we should see a fourth wave retracement, followed by one last heave down. I’m going to leave just how far down price might heave for a separate post.
In the meantime, let’s see how things play out.
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.
All text copyright @cryptolaidlaw 2018. All rights reserved.
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