august 24, 2013 newsletter

8/12/2019 August 24, 2013 Newsletter

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Saturday, August 24, 2013

Bitcoin

BTC/USDThe pattern of high volume sell-offs and low volume rallies is consistent with a larger bearish trend that should take

the price below the previous ~$50 low. However, because the overall volume has been generall decreasing with a largersidewas price movement, it!s "ust as likel that a counter-trend is taking place here. The dail #00sma andor weekl #0smaare the most likel bottoming targets if this supposed counter-trend eventuall breaks higher. The ma"or rising channel lowertrend-line remains the most likel bottoming target if the price falls below $50. %n increase in volume similar to that seen in %pril would help dislodge the price from its current corrective sidewas movement and support a larger trending move.



BTC/USD – continuedThe following chart illustrates how the price has performed around the dail #0sma. &asicall, from past evidence,

the dail #0sma is a critical support area during all bullish trends. 't can also become a ma"or resistance area during largerbearish trend as seen from the #0(( decline. )nce the trending dail #0sma is broken after a bullish trend, the price movestowards the dail #00sma. % close below the dail #00sma could easil result in a larger bearish trend. % failure to closebelow the dail #00sma would support a bullish consolidation phase within a larger bullish trend.

&ecause the price closed back above the weekl #0sma, the upper && is the ne*t ma"or resistance area. +oreover,because the weekl && is once again beginning to tighten, it is ver possible that a large move is on the horion. imilar toprevious ma"or rallies, ' would immediatel turn e*tremel bullish if the weekl candle closed above the weekl upper &&. %lternativel, ' would immediatel turn e*tremel bearish if the weekl candle closed below the weekl lower &&. Thesebands are renowned for containing the price untilunless the price closes outside of them. The coiling weekl +%/ warns of

an impending move. 'f the price fails to close outside of the weekl &&, it is entirel possible that the price continues to headsidewas for a length period of time.



BTC/USD – continuedntil a ma"or trend reasserts itself, the hourl #00sma will continue to provide minor support and resistance.

The following chart identifies simplistic et practical trend changes b focusing on significant highs and lows. '!verevised the previous method to avoid marking trend changes within a larger sidewas movement. The constantl changingminor trends is consistent with a larger correction. )nce a ma"or trend asserts itself, this chart will become much morepractical. /uring bullish trends, previous higher highs are often the reversal area of subse1uent higher lows. /uring bearishtrends, previous lower lows are often the reversal area of subse1uent lower highs.



BTC/USD – continued &ecause the price closed back above the weekl #0sma, bitcoin is once again technicall in a bull market based

on the following chart. However, weekl volume trends continue to paint a mi*ed picture. The decreasing volume rall backabove the weekl #0sma doesn!t e*actl scream 2bull market3 compared to a counter-trend rall where the price moveshigher on decreasing volume. &ut, this decreasing overall volume since %pril continues to be consistent with a neutraltriangle. 'n short, ' wouldn!t e*pect a substantial move higher in the short-term simpl because the price closed back abovethe weekl #0sma. imilar to the dail #0sma during a medium term trend, the weekl #0sma might be a bit permeableduring a sidewas correction compared to an outright bearish trend similar to #0((. 'n short, until substantial volume returnsand validates a weekl close back above or below the weekl #0sma, the price ma continue weaving around 4above andbelow the sidewas moving weekl #0sma without much meaning.

6rom a combined dail underling indicator and moving average perspective, the path of least resistance continues

to be up, especiall with the price still above the dail #0sma. However, cracks are beginning to form within the bullishargument. %lthough the dail +%/ and are still firml in bullish territor, the %/7 and 8' are now more supportive of areversal. Tpicall, the dail %/7 is in a strong bullish trend until ~90 is reached during a rising :/'. The dail 8' and arein a similar situation unless the close back below ~;0. The +%/ is considered bullish until it fails to hook higher. 't is worthnoting that there is a discrepanc between the dail %/7 reading found at stockcharts and tradingview.



BTC/USD – continued The following chart illustrates the top longer term <lliott =ave 4<= counts. nless the price falls below ~$>#, the

price is probabl heading above $#99 after this move down or sidewas is complete. &ecause the price closed back abovethe weekl #0sma, the price is probabl heading towards the ma"or rising trend-line in a sidewas triangle or flat. %s long asthis trend-line holds, it should be assumed that this sidewas movement will eventuall give rise to another powerful bullishtrend. However, if the price fails to bounce off this support and instead falls below it, then it can no longer be assumed thatthe price will simpl continue trending higher.

The following chart illustrates the most likel short-term <lliott =ave 4<= counts from m perspective. The <lliott=ave degree labeling and colors are not the same as those shown in the previous longer-term chart? instead, the degreelabellings are much smaller and can fit into an of these larger counts. Thus far, the price has followed the general path of atleast one of the short-term <= counts. &ecause a dramatic volume increase fails to materialie, it is ver likel that the price

is simpl tracing out a large neutral triangle. '!ve added the pink and green counts to account for this scenario. The former redcount was invalided once the price rose above $((5.0(.



BTC/USD – continued &ecause the price surpassed $((5.0(, the former triangle and it!s short-term red count were invalided. The

following chart illustrates a larger triangle beginning to take shape. The ne*t lower high can occur anwhere below $(99.@>and allow a valid resistance trend-line to be drawn. % move above $(99.@> would invalidate this triangle.

6rom a near-term <lliott =ave standpoint, the price is either in a >rd or -wave up from the $95.@# bottom. %ssomewhat e*pected once $((5.0( was surpassed, the the price 1uickl rallied to ~$(#@ where the length of the >rd or -wavewould e1ual the previous (st or %-wave A a tpical <= e*tension. 'f the price makes it past ~$(#@, the ne*t likel reversalarea is ~$(>B 4upper weekl &&. The <= labellings in this chart are smaller those shown in the short and longer termcharts. Thus far, the following near-term <= count can fit into an of the short-term <lliott =ave 4<= counts shown in ashort-term <= chart. 't is worth noting that '!m alwas hesitant to appl <= to bitcoin!s near-term waves because of thehigher degree of uncertaint. The impulsive move up from $B9 would likel end if the price falls below ~$((( 4wave-( high

and dail #0sma? although falling below ~((5 could be "ust as damaging to this trend because of a combined rising channeland horiontal support failure.



BTC/USD – continued &ecause the price of bitcoin has basicall trended with the .. stock market 4C7 for its entire histor, there is no

reason to assume that this positive correlation won!t continue. 'f the DC 500 heads higher, bitcoin will probabl head higher.'f the DC 500 heads lower, bitcoin will probabl head lower. %lthough ' e*pect these two market to trend together, ' continueto e*pect bitcoin to outperform the DC 500 longer term. 'n accordance with this correlation, if the DC 500 is indeed forminga significant top here, bitcoin could easil fall below the significant rising lower channel trend-line seen in the provided longerterm chart and enter a prolonged bear market. 'n the near-term, the notable C7 sell-off warns of an eventual &itcoin sell-off.



Stocks

SPX U!S! Stoc" #ar"et

&ecause the C7 has officiall closed below its dail #0sma, the price can easil continue lower in the near-term.'!m anticipating a move back towards the dail #00sma, ma"or rising channel, and ma"or horiontal support in the short-termbefore another significant move higher.

The following C7 chart details the most likel medium to longer term <lliott =ave counts from m perspective.



DAX $er%an Stoc" #ar"et'n the near-term, as long as the price continues to close above the dail #0sma, it is still probable for the /%7 to

continue heading higher towards the ~B500 high within the ma"or medium-term rising channeltrend-line. However, a closebelow the dail #0sma opens the door to the possibilit of a significant breakdown below the dail #00sma andor ma"or risingchanneltrend-line. &ut, as long as this confluence of support holds, the price is probabl going to continue heading higher inthe medium-term.

The following /%7 chart details the most likel medium to longer term <lliott =ave counts from m perspective.



SS&C C'inese Stoc" #ar"et&ecause the price fell below the upper-(E00 bottom from #0(# in a three wave pattern, another low should be

e*pected from an <lliott =ave standpoint, unless a running corrective is forming. &asicall, unless the price rallies above theconfluence of resistance at ~##00, the price is probabl headed back towards the recent lows. &ecause the recent spikehigher occurred from a trading error, '!m hesitant to invalidate the current <= count because of wave overlap.

The following < chart details the most likel medium to longer term <lliott =ave counts from m perspective.



()**&) +aanese Stoc" #ar"etThe dail #00sma continues to be both an obvious area of support and magnet for this market. 6rom an <lliott =ave

4<= viewpoint, if the decline off ~(9000 is merel a correction, another low should be e*pected so that there is a clear three-wave decline off the highs. %part from a lower low towards the dail #00sma, a sidewas triangle or flat would also fulfill the<= criteria and allow for the dail #00sma to meet up with the price.

The following F'GG<' chart details the most likel medium to longer term <lliott =ave counts from m perspective.



Commodities

$-.D6rom an <lliott =ave standpoint, gold is clearl bottoming in the medium-term even if the price heads lower in the

short-term. <ither $((;E or another low would 1ualif as a completed <= five wave pattern down from the $(;EB top.<ventuall, '!m e*pecting a rall towards the dail #00sma and ma"or horiontal resistance found at ~$(500 before anothersignificant sell-off. The recent break above the falling 2acceleration3 channel has increased the likelihood of a largercorrection higher consistent with the alternative <= count. 'n the short-term, a move lower is e*pected towards, at least, thedail #0sma after the price closes back below the dail upper &&.

6rom a longer term perspective, the decade-long gold bull market probabl ended once the price breached ~$(5#54critical horiontal and rising channel trend-line support. &esides 6ibonacci retracement support, the ne*t ma"or horiontalsupport is found at ~$(000. 'n the medium-term, it wouldn!t be surprising to see a counter-trend rall back towards ~$(5#5resistance before another significant sell-off.



S).& 6rom an <lliott =ave standpoint, silver is clearl bottoming in the medium-term, even if the price heads lower in the

short-term. <ither $(B.(; or another low would 1ualif as a completed five wave pattern down from the $>5.@@ top.<ventuall, '!m e*pecting a rall towards the dail #00sma and ma"or horiontal resistance found at ~$#9 before anothersignificant sell-off. The recent break above the falling 2acceleration3 channel has increased the likelihood of a largercorrection higher consistent with the alternative <= count. 'n the near-term, ' continue to e*pect a correction back towards,at least the dail #0sma, especiall because the price has now reached the previous falling base channel resistance.

6rom a longer term perspective, the decade-long silver bull market probabl ended once the price breached ~$#94critical horiontal and rising channel trend-line support. 'n the medium-term, it wouldn!t be surprising to see a counter-trend

rall back towards ~$#9 resistance before another significant sell-off.



C-PP& ntilunless the price closes below the falling channel support trend-line, the price is probabl going to continue

heading sidewas below the dail #00sma and above the falling channel support trend-line in the shortmedium-term. % dailclose below this support area would likel result in a continued post-triangle sell-off into the lowmid-$#s. %lternativel, amove above ~$>.B 4triangle <-wave harms the larger bearish trend. 'n the near-term, a significant reversal could easil occurnow that the price has reached the dail #00sma.

The following copper chart details the most likel medium to longer term <lliott =ave counts from m perspective.&asicall, unless the price closes decisivel back above the falling channel!s upper trend-line, the path of least resistance isdown.



(ATUA. $AS&ecause the price closed below the dail #00sma and rising trend-line, natural gas is probabl heading lower from

here in the medium-term. =ith the bearish trend firml intact because of this break, '!m e*pecting an eventual push lowertowards meaningful support in the low-$>s or upper-$#s. 'n the nearshort-term, because the price is heading into ma"orhoriontal support around ~$>.(, the price could easil head higher or sidewas below the dail #00sma before selling offagain.

6rom a longer term perspective, the falling channel suggests further downside untilunless the upper trend-line isbreached. % close above the confluence of resistance around [email protected] would open the door to a much larger rall on the backof an inverse HD bullish reversal pattern.



-). .ig't Seet Crude&ecause oil rallied above a ma"or falling trend-line 4part of a larger potential triangle, the price can ver easil head

higher from here if the price can surpass the ne*t two ma"or horiontal highs. % move above ~$((5 has the potential to sendoil back towards it!s #00B top at ~$(50 fairl 1uickl in a post-triangle thrust move. This tpe of move would make sensealongside a general commodit relief rall. 'f other ma"or commodities continue selling off alongside .. dollar strength, itshould alwas be assumed that oil could "oin this sell-off. % move below $E(.#9 4triangle <-wave low would mark the end ofthe proposed triangle breakout and the likel start of a ma"or sell-off, especiall if the price falls below $;;.#B.

6rom a longer term perspective, until the price moves above ma"or resistance at $((0-((5 or below ma"or supportin the mid-$;0s, its difficult to argue for a larger move up or down compared to further sidewas range movement.



T(X – 10 ear U!S! Treasury (ote ie5d 610 &ecause the price has decisivel closed above the ma"or rising channel, the path of least resistance is up in themedium to longer term. %lthough ields and stocks are roughl heading in the same direction now, ' can easil envision ields

heading sidewas or falling if a significant sell-off in stocks occurs. +oreover, it!s entirel possible that a continuation of thisrall in ields triggers a significant sell-off in stocks. The confluence of support at ~#@ should serve as an optimal bottomingarea in the event of a corrective sell-off before another move higher.

6rom a longer term perspective, TF7 might have formed a ma"or bottom at (>.E@. The significance of this bottomwill be determined once the upper falling channel!s trend-line is reached. 'f the price fails to reverse there and instead closesdecisivel above that ma"or resistance, then the multi-decade-long bear market in ields probabl ended. 'n the short-term, acorrective pullback could easil occur now that the price has rallied towards the >B.# 6ibonacci retracement resistance off

the last move from the upper falling trend-line.



Currencies

&U/USD &uro, 7i8er, anti9do55ar %lthough the <8/ pair made a significant push higher up from (.#;5@, the price failed to do substantial

damage to the larger bearish trend down from ~(.>;. Fote how the price has basicall been in a sidewas pattern betweenthe upper-(.#s and mid-(.>s for around a ear now. nless the ~(.>@ high is surpassed decisivelsustainabl, this pair isprobabl heading back towards the ~(.#;5 low once the price closes below the dail #0sma. The bearish dail +%/divergence off this latest high helps support a significant reversal here if the price begins heading down in the near-term.

AUD/USD Aussie'n the short-term, unless the %// pair can close back above the confluence of resistance at ~0.E> and end theclear pattern of lower highs and lower lows, the path of least resistance is down within the ma"or falling channel. nless~0.BB represented a significant bottom, it is currentl unclear regarding whether the price is tracing out a wave-45 or wave-4@ with the larger <lliott =ave count. % close above ~.E> would open the door to an inverse HD reversal pattern.



USD/CAD .oonie in:ersenless the pattern of higher highs and higher lows in the /%/ pair ends, the path of least resistance is higher.

However, from an <lliott =ave standpoint, it has become increasingl difficult to rationalie a bullish outcome from thestructure instead of a bearish one, unless a ver strong move higher occurs and soon, because of the highl overlappedstructure consistent with a correction. % moveclose below ~(.0(>5 low, dail #00sma, andor ma"or rising channel wouldsupport a bearish trend change instead of a bullish continuation.

USD/+P en in:erse'n the shortmedium-term, the dail #00sma continues to be an obvious target for this downward correction. The

longer term path of least resistance continues to be up after this correction completes. 6rom an <lliott =ave standpoint, 'continue to e*pect either a move below the ~E@ low or a drawn-out sidewas correction to complete a larger degree @ th wavebefore the price continues significantl higher.



Disclaimer I %lthough this newsletter includes market analsis, all ideas, opinions, recommendations andor forecasts,e*pressed or implied herein, are for informational and educational purposes onl and should not be construed as an

inducement or instruction to invest, trade, andor speculate in the markets. %n action or refraining from action? investments,trades, andor speculations made in light of the ideas, opinions, andor forecasts, e*pressed or implied herein, are committedat our own risk and conse1uence, financial or otherwise.

The charts in this newsletter are made possible b stockcharts, bitcoincharts D tradingview.

6or more information about technical analsis, stockcharts offers free information under its chartschool tabIhttpIstockcharts.comhelpdoku.phpJidKchartLschool

%s alwas, feel free to ask me an 1uestions via email or chat,

<n"oM-waveaddict

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august 24, 2013 newsletter

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