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RE: Bitcoin (BTC) Morning Update: A Different Perspective

in #bitcoin7 years ago (edited)

Nice analysis again by @haejin. However, I would like to point out that Wave Theory states that the E wave often does not complete during triangle corrections. Discussion can be found on p.49 of Elliot Wave Principle by Frost and Pretcher. See below:

"A triangle appears to reflect a balance of forces, causing a sideways movement that is usually associated with decreasing volume and volatility. The triangle pattern contains five overlapping waves that subdivide 3-3-3-3-3 and are labeled A-B-C-D-E. A triangle is delineated by connecting the terminations [of these subwaves]. Wave E can undershoot or overshoot the A-C line, and in fact, our experience tells us that it happens more often than not."

Theoretical Corollary

Yes, I agree that cryptos have their own character, but this does not address the mechanics of corrections and the dynamics of the E wave that I am pointing out. What is going on here is more of a fundamental economic principle that supersedes the peculiarities of stocks vs. cryptos.

Often, cryptos conform to the triangle correction rules quite well. The point of my statement is to say that the E wave moves towards a point of decision. Volume is low, and prices have for the most part consolidated. This is why the price can undershoot the A-C line, as there is not sufficient sell volume to dive it lower (bullish scenario). Conversely, it could break down even further if some more sell volume comes in (bearish scenario).

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You're correct. the overshoot is a bearish wick and the undershoot is a bull wick.