This week action reinforced the idea that BTC topped on January 8. While there is always a possibility for the bullish trend to resume its march to the all time highs, I am viewing that the next several months the stock will be going through a complex correction.
At this point I think of a text book example of a long-term correction that consists of a zigzag, a flat, and a motive/diagonal wave in that particular order. Let’s explore the hypothesis.
The correction has started as forecast – a sharp drop, almost a 10000 points off the top. The analysis of the hourly chart makes me think that we are about to start the wave C of a zigzag. In this case, I am expecting wave C to last for 3-4 days and hit the target of 32000-29900 (January 18-19). There is a chance for this wave to extend to 1.618 of wave A (23800), but I am viewing it as rather slim. The wave C could take a shape of a straight motive wave or a diagonal. The actual shape of C would help us to determine the behavior and the targets for the next wave after C.
If the zigzag completes as expected, I would be viewing the next wave as a flat. I believe that the flats are the most unpredictable among all corrective waves and it is next to impossible to forecast its behavior.
However, from the candles perspective, I would be watching closely for the next 2 weekly candles and, the most importantly, the monthly candle. These will help me to understand what count is in play – the green or the red. For now the green count is my primary.