XTZ to show bullish Wyckoff and Elliott Wave Structures

10 de nov. de 2019

Hi everyone and welcome to my analysis.
It is once again hype time for many alts and Bitcoin is volatile and thankfully this time a lot of cryptos show finishing accumulation signs.
As a start, we can look at XTZUSD to see the beautiful Primary wave I of a larger bullish trend. Alternately, this might be an ABC bullish reaction to the initial downtrend created by XTZ until early 2019. Regardless, the trajectory is upward.

In the chart above, you can see the ABC pullback from the 5 wave bullish structure (which might be a wave II or B of an ABC). Now for those who like the extra fine details in EW analysis, this mostly looks likes an WXY double 3. So we have a smaller ABC in the marked W, and X and Y. But in my analysis EW just plays a guiding role in understanding the overall market structure. The point is, you need to see a 3 legged correction that doesn't give back all of the gains. The detailed count does not matter as much, when our trading strategy is defined by the Wyckoff method and not EW.

So off to our possible re-accumulation then. We can see the selling climax of wave A falling beautifully at 0.236 Fib level, which is a common pullback level for wave II in EW. Interestingly, the automatic reaction off the selling climax also falls at the 0.618 of the larger bullish trend, which again gives some weight to the analysis.
The structure of a trading range usually beings with a stopping action, where due to extra high demand, or extra high supple, the big market players (the composite operator - the CO) would take on a contrarian attitude (phase A). As a result an automatic reaction and a test of the low/high is formed.
After the shares change hands, (phase B), a last point of fear or capitulation occurs, when people loose their hopes of the market going up ever (this is similar to Elliott's description of wave II sentiment). Again since the majority is selling at this point, we have CO buying (phase C), which creates a stopping action, absorbs the last of the supply, and creates the final bullish push out of the trading range (phase D)

Also, in (re)accumulations, we typically see a diminishing supply up until the phase C capitulation.

So all of that in mind, one thing doesn't look right here:

We see that after our phase C shakeout, we follow the uptrend with a climactic action, with the largest supply in the range, that signal’s CO’s activity. So why is that so? Are we wrong? Is this a distribution?
Of course in the Wyckoff method we tend to focus more on “diagnosing” the market, rather than predicting it. If this current uptrend follows a UTAD formation, then we will shift our view to a bearish one.
For now, we need to look for other signs.
My hypothesis is that this is due to the hype of altcoins raising again. The market ALWAYS goes opposite to the majority’s expectation (which another way of saying the CO is contrarian). If all of us crypto traders are on a lookout for an upturn in alts, then with the positive signals that we see here, we all jump in to secure our part in the uptrend. What happens next? The CO sells it’s shares to profit from our available liquidity. (also CO here is similar to whales, the concept is the same, only Wyckoff studied them in stocks)

So to find better perspectives, we need to look at the BTC cross:
Let’s look at it from a EW and traditional charting perspective:
Given that we’re looking at correlating markets, we should see some type of similarity between the crosses.
One of our hypothesis was that this is a market with an WXY correction, waiting for wave Y to unfold. (or similarly, a wave ABC with C unfolding)
In the following screenshot, we can see a similar structure, with a count that makes sense for the narrative:


We see the wave A impulse type, a wave B rising triangle with a matching count, and wave C’s inception point.
We can also do the following count though:

Though here is when it gets interesting:


When we look at the market from a systematic Wyckoffian view, We can see the corrective pullback and selling climax similar to the USD cross. From this perspective, we see that we are still missing Phase C of our trading range. As we are going with a bullish view for now, we are looking for a pullback either to the 0.0013 area or the 0.00112 area. Before a sustainable uptrend to form.
This point, goes hand in hand with the observation that we had a buying climax in our USD pair, and validates the expectation for a pullback before bullish continuation
All in all folks, I believe a successful trader must refrain from predicting the market. Having an expectation or sentiment might be helpful, though it can easily introduce bias into our analysis and cause our updated view to follow too late after the market conditions switch. A great trader, is like a doctor. WE must know what signs in the market signal a specific behavior, and wait for confirmation to validate or reject the idea. So we shall wait for the market to create confirmation or rejection signals for us, and we will update this analysis here as the market unfolds.

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If you have any suggestions and criticisms please let me know in the comments! we are here to empower each other to survive this market!

Shayan