Bitcoin Signaling Multi-Week Sell-off;
Extreme Upside Targets Hit & Holding.
08/06/18 The Bridge – Bitcoin & the Rules of Extremes:
In late-July, Bitcoin reached its extreme upside target for July (monthly LHR at 8,482) while fulfilling the potential for wave equivalence – completing the third consecutive rally of 27 – 28 days in duration and signaling a top. That means that all of the 2018 advances have been of similar timing.
That July rally also allowed Bitcoin to produce two key validations that confirmed (at the very least) a 1 – 2 month bottom was intact (in late June). In surging right to its July LHR, Bitcoin revealed a few expectations for the ensuing weeks and months…
— By reaching its extreme monthly upside target, and fulfilling other upside targets simultaneously, Bitcoin ushered in the time when a reactive, multi-week sell-off was likely…
— On a similar basis, Bitcoin had surged to its weekly LHR on July 21 (~7,340), projecting a multi-week peak for the ensuing week. That is what took place, on a weekly basis (at 8,479)…Bitcoin fulfilled that weekly LHR by peaking on July 25 – the following week.
Inverse Expectations (What Next?)
When Bitcoin fulfilled that projected peak, it ushered in multiple expectations for the ensuing decline:
— A weekly HLS would likely be tested as part of the ensuing decline.
Once a weekly LHR has been tested and a subsequent top is set, a market now needs to test a weekly HLS – in the sell-off that follows – before it would be in a position to rally back to a corresponding LHR. It is like a pendulum swinging or a ball ricocheting.
— Ideally, that weekly HLS would be tested 1 – 2 weeks before the ultimate pullback low is set (similar rules to LHR).
— A 50% or .618 retracement – in time and/or price – would likely unfold during that decline.
— Related support levels, like daily or weekly 21 MACs, would likely influence that correction. (When Bitcoin was peaking, it was also attacking its weekly 21 Low MARC resistance at 8,370 – one of several factors contributing to the synergy of upside targets and intermediate resistance levels around 8,400.)
— An intermediate low is likely in late-August, the next phase of the ~8.5 week Cycle Progression.
Since this last factor is a separate one (only loosely related to the recent rally), there is a little more ambiguity. For instance, Bitcoin could set an initial low soon and then retest it in late-August – fulfilling multiple factors with a double bottom.
The important thing is to look for the greatest synergy of indicators, not to get tunnel-visioned on a single one.
— Fundamental corroboration could also be seen, with the Dollar potentially exhibiting new strength and applying some near-term bearish pressure on Bitcoin as that reactive sell-off unfolds…the Dollar has seen a rally back to its high after failing to turn its daily trend down.”
Bitcoin attacked multiple levels of upside extreme targets in late-July, ushering in the time for a multi-week sell-off. At the same time, the Dollar is showing renewed strength and could continue to weigh on cryptocurrency.
This action reinforces the focus on 3 – 6 month support at 5,500 – 5,800. If that is ultimately broken, ~3,200 becomes the next level of support (see July 13, 2018 The Bridge). Bitcoin’s ~21-Week (144-day) low – low – low Cycle Progression should produce one more important low in late-Nov. 2018. Negative cycles re-emerge in Sept. – Nov. ’18.
Refer to latest Weekly Re-Lay & INSIIDE Track publications for additional details and/or related trading strategies.