In my yesterday’s update I mentioned that “if the coin retraces lower than 56000 and stays in the area, I would be viewing this as a possible sign of a bigger reversal”.
Today’s closure below 56000 supported the hypothesis about a possible grand reversal.
- Today’s daily candle confirmed the Dark Cloud Cover of yesterday. If tomorrow BTC closes with a red candle that is comparable by size with the one today, I would consider the Three Black Crows, a very strong bearish continuation combo, completed. The implications could be serious. The RSI trend from the beginning of 2021 seems very supportive of the continued move down.
- Though today is Monday and anything could happen before Saturday, the weekly candle already looks like it is going to make a Bearish Harami or Bearish Engulfing.
- The monthly candle shows some selling pressure and there are two weeks to complete it. It is too early to think about options there.
Elliott Waves Perspective
It looks like the 5 waves up that completed yesterday extended only 1.618 of wave 1. At the same time, the channel of the wave was narrowing at the end. I view these signs as the hints for a possible strong reversal.
The wave down that started yesterday looks like it can be divided into 5 sub-waves. It means that this is only the first wave down. At least one more is to come after a retrace.
There are too many possible options on the table at this point from the Elliott Waves perspective. So I am going to focus on a few simple messages that I can read from the candlesticks.
- Yesterday’s candle completed a Bearish Harami. Today’s candle confirmed the reversal, at least for the short term.
- There is a possibility of a bounce to 56000-58000 area in the next 2 days.
- If BTC closes tomorrow with a third red candle that is comparable to the first two, a Three Black Crows would complete, hinting for a multi-day downtrend.
- If BTC closes tomorrow with a green candle, there would be a chance of one more all time high.
I cannot forecast the next move until I can see the tomorrow’s candle.
On the chart below – a possible wave structure for the next 1-2 days.