Feb 26
Bottom Is In Scenarios @ Crappy Trader Notes #8
BTCUSD correction bottom is materializing so today we will have a look at potential scenarios how it may unveil. We will also elaborate on the most probable course of price action.
Scenario #1 — Extended Flat Correction
Probability: High
Reversal level: 28–30k BTCUSD
Since november ATH this is the scenario that has the highest probability. Late January preliminary support with good demand might be a sign of this scenario. For this scenario current rally should be counted as wave 2 correction in the wave 5 down. In such case we should see a massive wave 3 with breadth of price action and heavy volume which may take us to sub 30k levels. Lack of selling climax is another point for this scenario — eventual end of wave 3 is a great candidate for selling climax.
This scenario is supported by fibonacci counts of eventual wave 5 final length vs the length of wave 3 and 1.
In this scenario Jan/Feb correction is a perfectly healthy 50% correction after wave 3.
One may also notice that breaking the 20–25k level would be a sign of a major double top — it’s the most bearish and dramatic yet most improbable. We analyze it later on.
Scenario #2 — Regular Flat Correction
Probability: Medium
Reversal level: 30–32k BTCUSD
In the regular flat scenario last summer lows are the most probable region of the reversal. The formation was played throughout recent months and is in its final phase. In case of this scenario double bottom formation is also created which gives additional credibility for a rebound. Moreover both wave counts on low and high time frame indicate that the bottom formation may build at 30–32k BTCUSD level. It would result also with a wave 5 truncation which is a common price action at reversal levels.
If this scenario is correct we should see sort of a volatile and hypodermic volume/price action in coming weeks followed by a long lasting trading range. It will be a sign of a solid base building and eventual preparation for the move up.
Scenario #3— Running Flat Correction
Probability: Low
Reversal level: 35–38k BTCUSD
In the running flat scenario last week support level at 36–37k BTCUSD is the bottom and we are part of the wave 1 up. However there is no clear wave count supporting this scenario (extremely shorted wave 5) as well as the price/volume action which lacks necessary hypodermic action, that is characteristic for major reversals. Also the time spent on accumulation is very short so it can’t be the base for a major move up. There is a lack of cause for price to rise to new highs.
That is why this scenario is possible but of low probability.
Scenario #4 — Massive Double Top
Probability: Very low
Reversal level: 11–18k BTCUSD
This is a sort of an “unleash hell scenario”. If we break 28k BTCUSD with no sign of automatic rally and trading range then we are doomed. The double top is fully validated and next station is 11–18k BTCUSD or even lower.
We assign very low probability to this scenario as it would invalidate higher level wave count and invalidate treating current April 2021 — today correction as a wave 4 flat correction.
Here are key regions marked in this scenario:
Summary
Here is a brief summary of bottom scenarios:
+------------------------+-------------+--------------------------+
| Bottom Scenario | Probability | Reversal level (BTC USD) |
+------------------------+-------------+--------------------------+
| 1 - Extender Flat | Very High | 28-30k |
| 2 - Regular Flat | Medium | 30-32k |
| 3 - Running Flat | Low | 35-38k |
| 4 - Massive Double Top | Very Low | 11-18k |
+------------------------+-------------+--------------------------+For sure this will be a volatile and risky period as approaching bottom and reversal is a bumpy road.
So as always, stay safe & liquid.
Great buy opportunities are just around the corner.
More reading
If you want to see how did i come to current predictions i recommend reading previous chapters of the blog. Therefore you can follow my reasoning and see how genuine my remarks are.
- Feb 2022 rally debunked — Next station 30k BTCUSD @ Crappy Trader Notes #7
- Jan 2022 bearish scenario explained — BTCUSD Bears Are In Control @ Crappy Trader Notes #6
- Late Dec 2021 strong confirmation of the wave C scenario — BTC Wave C Zoom In @ Crappy Trader Notes #5
- Early Dec 2021 early warning of a possible down turn — BTC Wave C storm is coming? @ CrappyTrader Notes #4
- Late Nov 2021 gloomy outlook on possible bearish scenario — Are we in a C wave? @ CrappyTrader Notes #3
- Nov 2021 having two alternatives on November price movement — A BTC breakout or bull trap? @ CrappyTrader Notes #2
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