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Bitcoin (BTC) - Potential end of correction in sight (H4/Daily)

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Hello All!

While being in correction phase since December 2017, BTC has been forming grand bullish Wolfe wave (purple).

The minor bearish wave (yellow) with its target at point 6 was formed between points III and IV of the major structure and is currently working.

Recently, BTC experienced a sharp drop and bounced back to it's present 8.2k

Despite the fact that the price touched line 1-4 of the minor wave (yellow), diminishing volume suggests that this bounce will only be short lived and the price will continue its descend to the designated level of 6k:

It is worth noting that Fibo fan indicates possible point V of the purple pattern at the same location as the planned target (point 6) of the minor wave.

This level represents the possible turning point #1 for the current bearish market.

When BTC hit this level back on Feb 6, 2018, the tremendous volume spike clearly showed strong demand and drove the price from 6k area to nearly 12k.

If the history repeats itself, we'll see the similiar drastic volume increase and the key bearish trendline (II-IV) will be irrevocably broken. Apparently, this will signify the long awaited end of correction.

If the price keeps falling, it may even re-visit 2.9k demand area of Sep 15, 2017. I consider this scenario to be much less likely than the first one, but it's also possible.

In any case, significant volume change at key levels can definitely assist in the indication of a turning point.

Thank you for reading!
Writing Inspiration music: The Big Short soundtrack :-)

Nota

Bullish divergence + solid volume increase apparently following "G20 rejects cryptocurrency regulation since it doesn't pose a risk to global financial stability" news from Reuters.

All this looks pretty good (for now), but until major downtrend line (II-IV) is not clearly broken, I would refrain from claiming this to be the long awaited end of the current correction.

Nota

Incredible 12% increase of BTC today was backed by really high volume - the largest since 12/11/2107 (H4). Currently, the price is holding slightly above the downtrend line. Looks like bulls are getting back to business :-)

Nota

However, after this impressive jump, the diminishing volume does not support further major move:

Nota

Record high build-up of short positions plummeted:

Nota

This is getting interesting - the price broke the top border of accumulation zone backed by solid volume increase. I must admit, I expected the price to re-test purple line II-IV around 7.4k in order to find support at this level for further move to the North. However, it looks like the support has already been found much higher at 8.1k

Nota

After the initial bullish spike, bears showed their teeth with fast counter-reaction backed by solid volume increase:

Long positions also dropped in numbers as it looks like that the bulls unloaded at local highs (nothing comparable to recent shorts squeeze wipeout). Interestingly, another maximum of longs can be reached around May 19 which is just few days after the end of Consensus 2018 event:

As no strong moves have been made by any side after the recent bearish reaction, the price is just slowly drifting further South.

If it reaches 7k, it may find strong support by touching the previous downtrend line. On the other hand, the price doesn't have too much time for descending too low as the last day to file 2017 tax returns is Tuesday, April 17.

Historically, at least for the last 4 years which I had checked, it was always providing a significant bullish boost and I have no reasons to believe this year will be any different.

Nota

After the initial breakup on April 12, the price is consolidating above the major downtrend line before the up move to the next range.
Please, fasten your seatbelts, we're preparing for the take-off)

Nota

Up we go backed by volume increase:

Nota

At 1min time frame, this recent breakup reminds about its greater counterpart from April 12th, but at a much lesser scale:

Nota

While BTC has already reached almost 9.3k at this point, I feel it is absolutely necessary to pay close attention to: "16,000 BTC and BCH (~$165 Mln) Suddenly Moves From Mt. Gox Wallets":

"This is the first time that any coins have been moved from the cold wallets associated with Mt. Gox since February. On that occasion, the coins were transferred on February 5. The following day, the price of Bitcoin dropped to its low for the year – around $6,000." (Not sure if I can provide direct link here, but if you check Google, you'll see lot of articles dedicated to this issue).

I urge caution as the nature of this transfer is still unknown and if this is not a real sale, but a preparation for the one, then BTC can experience a big drop.
Personally, I moved 1/3 of my alts into cash to see what happens next. Not urge anyone to do anything similar of course (everyone should make decisions based on their own research) - but it makes sense at least to closely monitor the market for unusual movements until the situation is clear.

If the effect is similar to Feb 5-6, possible volatility can be pretty dangerous for both bulls and bears, especially in case of margin trading. Hopefully, this situation will not have much effect on the market, but in my opinion it is better to be safe than sorry. Good luck All!

Nota

Update regarding Mt.Gox - it appears that 16,000 BTC and BCH were dealt with via OTC trade. At least, such conclusion can be made as "Kobayashi claimed in March that the trustee’s previous asset sales have been measured, saying, “Following consultation with cryptocurrency experts, I sold BTC and Bitcoin Cash, not in an ordinary sale through a BTC or BCH exchange, but in a manner that would avoid affecting the market price, while ensuring the security of the transaction to the [greatest possible extent].”"

There is no guarantee of course that the buyer will not sell them anyway later on, but so far the market didn't do anything really unexpected.

After the breakthrough of the major downtrend line (purple II-IV), BTC entered the correction phase and is forming another minor bullish wave (yellow):

Nota

BTC clearly broke the minor yellow wave and it is no more. This last volume increase was so sudden and drastic that it pushed the price up by 8% ( + 740 USD!!!) in a matter of minutes. Currently, the price is slowly going down and consolidating before the next move.

As it is clearly seen on the chart, the consequent bullish spikes have been moving the price upwards since April 12:

Nota

Classic bullish pennant pattern (symmetrical triangle) is being formed. If successful, its potential target is at the height of the initial pennant pole.

Nota

Breaking triangle formation is being backed by solid volume increase.

Nota

After the successful breakout of yellow triangle at 9.3k, BTC failed to break the resistance at 10k and formed bearish Wolfe wave (blue). Its current target is at previous support level of 8.7k. However, this bears attempt to regain control will probably not last for too long. Consensus is starting soon and the price may very well start growing ahead of this event in anticipation of upcoming good news as it had already happened before:

Nota

BTC just plummeted through 8.7k with no resistance due to panic sale caused by a combo of negative news (Upbit investigation + rumours about supposed Mt.Gox dump of 8.2k BTC* on open market). Just few days prior to that, the market sentiment was also influenced by the standard mantras of Warren Buffet/Munger and Gates.

The picture on H1 looks indeed pretty bearish - the next support is only at 7.8k:
tradingview.com/chart/sjQ7Wn5L/

Interestingly, the Upbit is still operational and the outcome of the investigation is (obviously) not yet known.

Another supposed Mt. Gox sale also seems strange.
2 weeks ago, 16k BTC and BCH didn't do much as were apparently sold via OTC deal. And now, 8.2k BTC are just sending the market to free fall? And all of the sudden, they were just thrown to the open market instead of OTC? Or dealt by OTC in order to be instantly sold by the buyer? Sounds strange to me to be honest.

Warren Buffet/Munger and Gates - their ideas on crypto are very well known and have been the part of public space for quite many years. Currently, they are all staying out of this market and thus their words contain nothing new or interesting.

But being combined, all of these are currently making bears very happy. And quite possible will make (some) bulls very happy too buying much lower right prior to Consensus.

Nota

*The picture on H1 looks indeed pretty bearish - the next support is only at 7.8k.
So far, bulls are hiding somewhere lower:

Nota

More importantly, regarding Upbit - people pulled out the money just from this particular exchange. Yes, coins like EOS, TRX and ADA were hit really bad due to high volumes being traded there. But, generally speaking, I can hardly believe that the money pulled out from Upbit will be just cashed out. Most likely, these funds will return back soon considering the current price drop.

Nota

Reversal backed by solid bullish volume increase - Consensus started!

Nota

It looks like no good news (Consensus/Upbit being cleared after the audit/CBOE futures settled on May 16*) are actually influencing the market in a positive way anymore.

(*Yes, I know that futures trades shouldn't affect the price of the asset. However, for the previous 4 months since their introduction to the market, the settlement date was always followed by a moderate up move. This is the first time it is different.)

With support at 8k is getting broken down with consequent bearish volume spikes and no sign of bull's presence, the next target is at 7.1k:

Nota

Minor bearish Wolfe wave is being formed. The validity of point 5 should be confirmed by volume increase at point 5.

Nota

Minor Wolfe wave is working, price is moving South:

OceanBlue

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