Rules of Alternation, this wave 4 may occurs deeper
Today's market movement from bitcoin is very awful. Price has shown a rejection pattern from the resistance zone of 1.1 fibonacci extension which I've covered on the previous post. In this analysis, I'll cover the Elliott wave and the rule of alternation.
First of all, here is what I see for the best Elliott wave labelling based on current structure. I do believe that at current condition, the price is trending at the wave 3 in the grand cycle and slightly getting rejected after touched the 1.1 fibonacci extension. Based on the Elliott wave rules and guidelines, there is a rule of alternation which describes that waves 2 and 4 often take alternate forms.
Based on the rules of alternation, if the wave 2 takes a simple zig zag correction, the wave 4 is usually takes more complex correction and vice versa. Based on current structure, we can see that the wave 2 is retracing at the .236 fibonacci retracement, that's why we must assume that the wave 4 will forms more complex correction. This could be a WXY or WXYXZ correction as well.
My assumption is that when you see the huge upside moves like what the bitcoin did, there will be a potential deep correction as the price may corrects more than .236 fibonacci retracement (as the benchmark of where the wave 2 ended). With this say, we can see a huge range from the .382 - .618 region as the ends of this downside moves before price may surge for the last wave to forms.
First of all, here is what I see for the best Elliott wave labelling based on current structure. I do believe that at current condition, the price is trending at the wave 3 in the grand cycle and slightly getting rejected after touched the 1.1 fibonacci extension. Based on the Elliott wave rules and guidelines, there is a rule of alternation which describes that waves 2 and 4 often take alternate forms.
Based on the rules of alternation, if the wave 2 takes a simple zig zag correction, the wave 4 is usually takes more complex correction and vice versa. Based on current structure, we can see that the wave 2 is retracing at the .236 fibonacci retracement, that's why we must assume that the wave 4 will forms more complex correction. This could be a WXY or WXYXZ correction as well.
My assumption is that when you see the huge upside moves like what the bitcoin did, there will be a potential deep correction as the price may corrects more than .236 fibonacci retracement (as the benchmark of where the wave 2 ended). With this say, we can see a huge range from the .382 - .618 region as the ends of this downside moves before price may surge for the last wave to forms.
