XBTUSD D1 chart (8/15/2019)
Good morning, traders. Last night is a good example of why, if you're correcting in a bull trend, you want to wait for confirmation on larger TFs before entering long. Many traders are fearful of going long now, and a lot of them are even short. Here's a reality check, though: for as far as price dropped the past two days or so, the volume was nothing special. It wasn't significant for the past 1.5 months (the correction) and, as a matter of fact, it was nothing more than a continuation of the overall downtrend in volume during this period. Yesterday I said that we wanted to see $10000-$10200 hold and that if we saw a strong drop through it, then we were likely headed into the 8000s overall. But now we have to question that due to the lack of significant volume on that drop. That doesn't mean we won't head down that way after a brief reprieve here, but it does bring up another WXY correction possibility.
We already know that the abc wave that makes up the (w) wave is a flat. The (x) wave appears to be a simple abc as we would expect. However, the CME gap narrative has lead us to believe that the only possible outcome now would be the drop into the 8000s. But it isn't. We could see this (y) wave play out as a triangle similar to what is outlined. This is something I spoke with our premium Discord members about earlier this week. Why might this happen?
Our first clue is the volume. We can see that it has continued to contract throughout this entire correction. I expected it to break out of that contraction on this drop down if we were going into the 8000s (and it still might, depending on how today and tomorrow turn out, but for right now traders should be pausing and considering other possible options). The bulk of the movement during this correction continues to remain within the higher volume nodes. Any dip or push beyond them is short-lived as price continues to contract toward the EQ of price action. The daily candle is currently a dragonfly doji which, as with all dojis, means pause but it could end the day as a much more bullish candle. As long as price continues rising, today's volume should break that contracting volume downtrend and lock it in as demand rather than supply. However, we would expect volume to contract overall as the triangle prints. Daily Stoch RSI is almost bottomed out and RSI appears to be finding a bottom around 40 which has been the support/resistance during the entire bull run so far. Locally, it has been the point of price reversal every time during this 1.5 month correction. There is also hidden bullish divergence printing once more on the weekly TF, but with half the week or so still remaining that may not play out.
On the shorter TFs, we have a descending broadening wedge that has printed. A successful close above it should have price targeting the ~$10900 level which is also the H4 S1 pivot. Be sure to make the chart your own per the directions below and then zoom into the shorter TFs to get the potential EW count that I drew on their this morning for our Discord members. The H1 Stoch RSI remains high at this time so I'd like to see that reset without affecting price too much. On the H1 TF, you will also not the two resistance lines on RSI which I've been talking about for a while. I said I wanted to see price pushing through them to indicate a bounce, if not a reversal. You will note that the push through the red resistance was the start of the bounce off the S3 pivot and currently RSI is sitting against the black resistance. RSI overcoming this latter resistance should coincide with price leaving the descending broadening wedge and, as mentioned above, puts the ~$10900 target into play.
I will be live streaming this morning at 10 a.m. CST/3 p.m. UTC and would love to have y'all check in and say hi. I'll be going over this and a few more bearish scenarios during that time.
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Be sure to hit the "thumbs up!"
Every day, we have a choice to act positively or negatively, so if you get a chance, do something decent for someone today which could be as simple as sharing a nice word with them. You just might change their day, or even their life.
You can always click on the "share" button in the lower right hand of the screen, under the chart, and then click on "Make it mine" from the popup menu in order to get a live version of the chart that you can explore on your own. When you do, be sure to explore the other TFs to see what I'm watching on those TFs.
We already know that the abc wave that makes up the (w) wave is a flat. The (x) wave appears to be a simple abc as we would expect. However, the CME gap narrative has lead us to believe that the only possible outcome now would be the drop into the 8000s. But it isn't. We could see this (y) wave play out as a triangle similar to what is outlined. This is something I spoke with our premium Discord members about earlier this week. Why might this happen?
Our first clue is the volume. We can see that it has continued to contract throughout this entire correction. I expected it to break out of that contraction on this drop down if we were going into the 8000s (and it still might, depending on how today and tomorrow turn out, but for right now traders should be pausing and considering other possible options). The bulk of the movement during this correction continues to remain within the higher volume nodes. Any dip or push beyond them is short-lived as price continues to contract toward the EQ of price action. The daily candle is currently a dragonfly doji which, as with all dojis, means pause but it could end the day as a much more bullish candle. As long as price continues rising, today's volume should break that contracting volume downtrend and lock it in as demand rather than supply. However, we would expect volume to contract overall as the triangle prints. Daily Stoch RSI is almost bottomed out and RSI appears to be finding a bottom around 40 which has been the support/resistance during the entire bull run so far. Locally, it has been the point of price reversal every time during this 1.5 month correction. There is also hidden bullish divergence printing once more on the weekly TF, but with half the week or so still remaining that may not play out.
On the shorter TFs, we have a descending broadening wedge that has printed. A successful close above it should have price targeting the ~$10900 level which is also the H4 S1 pivot. Be sure to make the chart your own per the directions below and then zoom into the shorter TFs to get the potential EW count that I drew on their this morning for our Discord members. The H1 Stoch RSI remains high at this time so I'd like to see that reset without affecting price too much. On the H1 TF, you will also not the two resistance lines on RSI which I've been talking about for a while. I said I wanted to see price pushing through them to indicate a bounce, if not a reversal. You will note that the push through the red resistance was the start of the bounce off the S3 pivot and currently RSI is sitting against the black resistance. RSI overcoming this latter resistance should coincide with price leaving the descending broadening wedge and, as mentioned above, puts the ~$10900 target into play.
I will be live streaming this morning at 10 a.m. CST/3 p.m. UTC and would love to have y'all check in and say hi. I'll be going over this and a few more bearish scenarios during that time.
_____________________________________________________________
Be sure to hit the "thumbs up!"
Every day, we have a choice to act positively or negatively, so if you get a chance, do something decent for someone today which could be as simple as sharing a nice word with them. You just might change their day, or even their life.
You can always click on the "share" button in the lower right hand of the screen, under the chart, and then click on "Make it mine" from the popup menu in order to get a live version of the chart that you can explore on your own. When you do, be sure to explore the other TFs to see what I'm watching on those TFs.
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